Oil and bank stocks push FTSE higher

F IRMER banks and energy stocks, lifted by an improved outlook for the global economy, fuelled slight gains on Britain’s top share index, pushing it to its highest close in over four months yesterday.

The FTSE 100 ended 11.04 points, or 0.2 per cent higher, at 5,439.19, up for a seventh consecutive day after it gained 1.1 per cent on Friday, supported by non-farm payrolls data in the United States that was not as bad as expected.The index closed at its highest since 30 April, though it is still down 6.6 per cent since mid-April when fears exploded over the state of Europe’s sovereign debt. Non-farm payrolls data on Friday showed that job losses in the United States were much lower than forecast, giving a sustained bounce to the global equities market.

But some investors were cautious after a sustained run-up in stocks, with the overall macro-economic picture being far from bright.

“People got so negative that the US data was a relief, but non-manufacturing PMI data was negative... and I am now a bit more concerned on equities,” said Steven Bell, director at hedge fund GLC.

Oil and gas producers led sector gainers, rising around 0.6 per cent, with heavyweight BP up 1.2 per cent after a Morgan Stanley note suggested up to 50 per cent upside potential for the stock, following the oil spill sell-off. A Financial Times report that BP had revived the potential sale of its Alaskan assets was also supporting the stock.

Banks, whose performance tends to be driven by shifts in risk appetite, also rose on the continued positive sentiment, up 0.5 per cent, led by a 1.3 per cent gain in HSBC. The index broke through the 61.8 per cent Fibonacci retracement of the April peak to July low, although volumes were thin with the US closed for Labor Day. Trading was at just 42 per cent of the 90-day average.

Among individual stocks, Home Retail, Britain’s number one household goods retailer, rose 2.6 per cent after Seymour Pierce raised its rating to “hold” from “sell”, ahead of its second-quarter trading statement on 9 September. On the downside, GlaxoSmithKline fell 1.5 per cent.