Surge in banking shares helps FTSE to maintain its near 6-month high

STRENGTH in banks and energy stocks hauled Britain’s leading share index higher yesterday as fresh central bank stimulus moves, this time from the Bank of Japan, whetted investors’ appetite for riskier-perceived assets.

The BoJ joined in recent action from the US and Europe with bond purchases designed to kick-start its economy as central banks aim to halt the slowdown in global growth and take the sting out of the Eurozone debt crisis.

Gains by banks provided the biggest lift for the blue chips, with global heavyweight HSBC the best sector performer, ahead 1.7 per cent and alone adding over 7 points to the index in volume of 120 pe rcent of its 90-day daily average. FTSE 100 volume was at 85 percent of the daily average.

HSBC and other banks benefited from price target hikes by BofA Merrill Lynch in a review of European Banks which concluded that moves by central bank policymakers have reduced the likelihood of negative risk events for the sector.

The FTSE 100 closed up 20.32 points, or 0.4 per cent at 5,888.48 yesterday, holding near six-month highs reached last Friday.

United Utilities was a top individual FTSE 100 gainer, up 2.8 per cent with traders citing rehashed bid talk ahead of a trading update from the water firm due today.

Several papers said a Middle East sovereign wealth fund might be willing to pay up to 950p-per-share for the firm.

Aviva was the worst blue chip performer, off 3.3 per cent, having dropped on Tuesday in reaction to two broker downgrades.