Oils and banks lift the large caps but defensives slide

THE FTSE 100 gained 1.3 per cent yesterday, boosted by strength in oil majors and banks, and reflecting early gains on Wall Street. The index closed 53.02 points higher at 4,294.03, recovering most of last week&rsquo;s 1.5 per cent decline.<br /><br />&ldquo;What is most impressive about today&rsquo;s rally is the breadth of the buying. Most sectors are on the advance with banks and energy firms leading the way,&rdquo; said David Evans, market analyst at<br /><br />Strength in oil majors provided the main support for the FTSE 100 as crude prices pushed above <strong>$71. BP, Royal Dutch Shell, BG Group, Tullow Oil</strong> and <strong>Cairn Energy </strong>gained 1.0 to 4.1 per cent.<br /><br />Lloyds Banking Group was the biggest individual blue chip gainer, adding 6.1 per cent, lifted by a positive note by Goldman Sachs which upgraded it to &ldquo;buy&rdquo; from &ldquo;neutral&rdquo; in a sector review.<br /><br />Other banks moved higher too, with <strong>Barclays, Royal Bank of Scotland, HSBC</strong> and <strong>Standard Chartered</strong> rising 0.3 to 4.3 per cent.<br /><br />Miners were higher, supported by strength in metal prices, with <strong>Rio Tinto, Eurasian Natural Resources, Kazakhmys</strong> and <strong>Anglo American</strong> up 0.5 to 4.5 per cent.<br /><br />But <strong>Xstrata</strong> was a faller, down 2 per cent. <strong>Anglo American</strong> is building its defences against a &pound;41bn potential takeover from Xstrata by planning talks about a major Chinese investment.<br /><br />Market heavyweight <strong>Vodafone</strong> added strength to the blue chips, gaining 1.2 per cent as investors responded to reports the company was considering a bid for <strong>T-mobile</strong> UK.<br /><br />However Deutsche Telekom, owner of T-Mobile said it was not about to decide whether to sell the unit.<br /><br />Other defensive stocks were cold-shouldered as risk appetite returned to the market, with drugs, tobaccos, food producers, and utilities the worst off. <br /><br /><strong>GlaxoSmithKline</strong> shed 1.1 per cent and <strong>AB Foods</strong> lost 0.9 per cent, while <strong>Imperial Tobacco</strong> and <strong>Centrica</strong> both fell 0.4 per cent.<br /><br />Tour operator <strong>Thomas Cook</strong> lost 1.9 per cent on continuing worries over the future of its majority shareholder, Arcandor, with a decision on state-aid for the German retail giant due on today.<br /><br />Among midcaps, <strong>National Express</strong> added 9.8 per cent after news the train and bus operator had rejected an unsolicited takeover bid from rival <strong>FirstGroup,</strong> which fell 1.3 per cent.