Bank and industry stocks up as FTSE 100 breaks 5,300
The FTSE 100 index jumped 1.9 per cent yesterday, boosted by strong banks ahead of today’s European stress test results, and by firmer miners and oils as US stocks rallied on earnings and data.
Britain’s top share index closed up 99.17 points at 5,313.81, ending above 5,300 for the first time since 18 May, the day before Germany introduced a short-selling ban at the height of the euro-zone sovereign debt crisis.
The gain took a two-day rally by the UK index to 3.3 per cent after it snapped a five-session losing streak on Wednesday.
“Strong rallies have not been scarce over the past couple of months but they have ultimately come to nothing,” said Yusuf Heusen, senior sales trader at IG Index.
“The real test over the next couple of days is whether shares can build on the recent gains to push higher still and finally shake off the wary attitude investors have had for some time,” said Huesen.
Banks provided the main strength for the blue chips, with Barclays the best sector performer, up 4.6 per cent, while Lloyds rose 4.2 per cent.
The banking sector was also boosted by recent results from US peers in the last week, while Credit Suisse was the first of the big European investment banks to report yesterday.
There was some positive economic data, as British retail sales volumes received a World Cup boost in June after strong sales of electrical goods drove a faster than expected 0.7 per cent monthly rise, official data showed.
Miners pushed higher in London, led by Kazakhmys up 5.2 per cent, as metals prices firmed helped by the US data, with copper hitting its highest level in nearly two months.
Energy stocks also benefited as crude prices moved higher, with BG Group and Royal Dutch Shell adding 1.8 per cent and 2.4 per cent respectively. Cairn Energy also climbed 4.4 per cent.
But BP was flat as investors worried about the possible impact of a storm on the firm’s operations to end the worst oil spill in US history.
Among individual stocks, Rolls-Royce was the top FTSE 100 gainer, up 5.5 per cent as investors’ cheered the flow of orders booked by the aero engines firm at the Farnborough airshow this week.
Invensys also stood out, up 5.2 per cent as an old rumour was revived that the firm could be a bid target for Germany’s Siemens.
“The recent bid approach for Tomkins, and yesterday’s offer for SSL from Reckitt, have just stirred up some of the old chestnuts,” said one trader.
Software firm Autonomy was the top FTSE 100 faller, down 9.1 per cent after second-quarter earnings.
“We estimate that after adjusting for one-offs, Autonomy failed to grow its core business in Q2 2010,” KBC Peel Hunt said in a note, maintaining its “sell” rating.
And Imperial Tobacco shed 2.9 per cent after it said cigarette volumes fell 4.3 per cent in the nine months to June.