Saudi oil pledge fuels FTSE rally

The FTSE has rallied strongly this afternoon, shaking off the technical glitch that upset morning trading to finish just above the 6,000 level.

The FTSE 100 closed up 1.37 per cent at 6,001.2 after oil price fears subsided following a Saudi announcement that it had increased output to make up for any shortages as a result of a disruption to oil supplies caused by the political turmoil in Libya.

Miners rose as investors welcomed commodities again and concerns over the impact of unrest in North Africa and the Middle East fell back.

"The mining sector provided the backbone for a strong, broad-based rally, with only around half a dozen stocks in the red,” said Will Hedden, sales trader, IG Index.

“However, Arm Holdings just edged up following an upgrade from Merrill Lynch, and turned around a dip in form after an exceptional run in December and January.”

ARM closed up 6.02 per cent at 608p.

Precious metal miner Lonmin (up 4.51 per cent to close at 1,829p) was joined by Anglo American (up 4.04 per cent to 3,307p), Vedanta (up 4.06 per cent to 2,360p) and Antofagasta (up 3.64 per cent to 1,397p) 
in the top ten risers.

Satellite broadcaster BSkyB added 4.1 per cent, after reports that Rupert Murdoch's News Corp is close to an agreement with regulators about its bid for the British satellite broadcaster.

Lloyds Banking Group was the biggest faller of the day despite beating profit forecasts, closing down 4.45 per cent at 62.85p.

“There appears to be some concern about the sustainability of its future margins in the wake of any future funding requirements,” said Michael Hewson, market analyst at CMC Markets.

Barclays and RBS were also down – RBS particularly so due to its underperformance yesterday, Hewson said.

US blue chips were 0.4 per cent higher by London's close supported by a jump in the final February reading for the University of Michigan consumer sentiment index to 77.5, its highest level since January 2008.

There was little reaction to revisions for fourth-quarter growth data in either Britain or the US.

“American markets are also recovering,” Hedden said.

“But it is the lower oil prices that are providing the greatest sense of comfort for investors – the situation in the Middle East has made this one of the most interesting weeks for traders in a long time, and another day of aggressively falling markets would have given many a reason to doubt the health of the market.”