Strong US data helps lift the FTSE as miners and banks take a dive

BRITAIN’S top share index rose yesterday, with energy stocks in the lead, improving on small gains earlier in the day after US data allayed some concerns over a stalling of the global economic recovery.

At the close, the FTSE 100 index was up 20.87 points or 0.4 per cent at 5,859.71 points, near the session peak, having broken out of a tight trading range, which had kept it pinned back close to opening levels for most of the session.

Figures out yesterday showed US consumer confidence jumped to its highest in seven months in September and that US single-family home prices rose for a sixth month in a row in July.

“Prior to the US open, the FTSE had been really listless with nearly nothing on the domestic corporate or economic front to provide interest, but it’s been some positive data which has given the market a shot in the arm,” said Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

The main support for UK blue chips came from energy stocks, which rose 0.5 per cent on a 1.1 per cent gain in Brent crude due to supply concerns as oil producer Iran increased its rhetoric against Israel, heightening worries about a potential conflict between the two countries.

Oil service firms also benefited from firmer crude prices. Petrofac added 1.4 per cent, with the stock helped as well by an upbeat note on the sector from Canaccord Genuity.

Pumps maker Weir Group, which counts oil service firms among its main customers, was the top blue chip riser, up four per cent as traders cited vague bid talk, noting that Weir also remained one of the most shorted FTSE 100 stocks.

Oriel Securities in a note this week spotlighted the possibility that Weir could become a bid target for US giant General Electric.

Markets also got a lift from comments from San Francisco Fed President John Williams that he expected the US central bank to expand its bond-buying programme next year.

The FTSE 100 has risen over five per cent so far in the third quarter, with only three trading sessions left to go, lifted by the prospects of central bank moves to stimulate a struggling global economy which both the European Central Bank and US Federal Reserve delivered this month.

“It has been a strong third quarter for stocks as a result of the global effort by central banks. However, this is likely to lose momentum over the next month or so as traders lock in gains and await the next move by the Eurozone in particular,” said Craig Erlam, a market analyst at Alpari.

The bank sector was weaker, weighed down by a 1.6 per cent fall by Standard Chartered due to fears of a stock overhang after a report that Singapore investor Temasek was considering selling its 18 per cent stake in the bank.

Oriel Securities analyst Mike Trippit remained bullish on Standard Chartered shares: “Any potential share price weakness resulting from uncertainty over Temasek’s shareholding is a buying opportunity, in our view.”

The mining sector was the biggest drag on the blue chips, hit by worries over the impact on demand for metals from a likely slowdown in top consumer China.

Mining bid target Xstrata fell by two per cent and its would-be predator Glencore by 2.1 per cent as investors fretted over the implications of an extended 1 October deadline for Xstrata to decide whether to accept the $36bn revised offer.