FTSE 100 bounce back led by banks

The FTSE 100 lifted in early trading today as banking stocks led the way.

The recovery came
after a poor session yesterday with the euro zone debt crisis casting a shadow over European markets.

Citigroup upgraded HSBC to “buy” from “hold”, fuelling more confidence in the banking sector. Barclays also climbed as the London Stock Exchange opened.

European stocks in general recovered as forecast-beating results from US aluminium major Alcoa – the first major company to report in the country’s earnings season – sparked hopes that the global economy was getting back on its feet.

Investors were also cheered by news that Japan was considering buying about 20 per cent of euro zone bonds to be jointly issued later in January to raise funds to support debt-swamped Ireland.

Japan’s move was key to the buoying of markets as Portugal seemed to be teetering on the brink of a bailout, with euro zone kingpins Germany and France jittery over the country’s debt woes.

Meanwhile Hong Kong shares rose overnight as North Asian markets outperformed others in the region, with optimism over economic growth and corporate activity offsetting investor concerns over euro zone debt. The Hang Seng reversed two days of declines, rising 0.99 per cent to 23,760.34.

In UK economic data released today retail sales fell in December for the first time since last April as heavy snow and concerns about the economic outlook deterred consumers.

The British Retail Consortium (BRC) said the value of sales dipped 0.3 per cent in December from a year earlier on a like-for-like basis, following a 0.7 per cent rise in November.

The figures were released as high street heavyweight M&S reported a 2.8 per cent rise in like-for-like sales in the 13 weeks to 1 January, including a record day for food sales. However, it echoed the sentiments of other retailers, warning that austerity measures would mean 2011 would be a tough year.

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