Return of optimism bolsters FTSE as JP Morgan cheers

BRITAIN’S top share index surged 2 per cent yesterday, hitting its highest closing level in more than a year, as quarterly earnings from JPMorgan Chase and Intel lifted investor's sentiment.

The FTSE 100 ended up 101.95 points higher at 5,256.10, after closing 1.1 per cent weaker on Tuesday.

The UK benchmark, which tumbled more than 31 per cent last year, has rallied 52 per cent since hitting a floor in March and is up more than 18 per cent this year.

“With the growing optimism and better than expected earnings news, I see the FTSE testing 5,400-5,450 by the end of third-quarter earnings season if the rest reflect what we’ve seen so far,” said Jimmy Yates, head of equities at CMC Markets.

JPMorgan followed up Intel’s impressive quarterly results overnight on Tuesday, by announcing a sharp rise in profits yesterday, as underwriting revenue offset losses on credit cards and other consumer loans.

British banks were among the top risers, after JPMorgan’s figures boosted the outlook for the sector and ahead more results due from US peers on Thursday and Friday.

Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group were up 2.7-6.6 per cent.

However, European banks, including British ones, are still lagging the general market recovery and remain 6 per cent below levels seen 12 months ago.

Investors will get the chance to chew over Citigroup and Goldman Sachs results, due today, and Bank of America and General Electric on Friday.

Miners were the biggest winners on the back of stronger metal prices, bolstered by a flagging dollar and an improved demand outlook.

Rio Tinto was up 5.3 per cent after a bullish third-quarter operations review.

Xstrata, Lonmin, Anglo American , Kazakhmys and Fresnillo added 1.6 to 9.4 per cent.

Oil stocks also gained as crude crept over $75 per barrel, touching its highest in nearly 12 months. BG Group,BP , Royal Dutch Shell and Tullow Oil added between 2.4 and 3.6 per cent.

Cairn Energy rose 8.6 per cent after reporting its India unit secured loans worth $1.6bn to fund its project in the western state of Rajasthan.

The number of Britons claiming jobless benefit rose by its smallest amount in almost 1-1/2 years in September, in a sign the worst of the job-shedding due to the recession may be over.