FTSE hits six-month high fuelled by Greek deal
The FTSE 100 climbed 0.9 per cent to a six-month high of 5,905.7 as investors’ confidence was buoyed by Greek politicians finally approving a new set of austerity measures.
However, the move triggered civil unrest on the streets of Athens with the most violent clashes since the country’s disastrous financial situation was laid bare.
The European banking shares index gained 1.6 per cent, led by Eurozone lenders exposed to debt-laden peripheral countries. Commerzbank and Societe Generale were up 4.2 per cent and 3.4 per cent, respectively.
In London Lloyds was up 2.5 per cent, while Barclays and RBS gained more than two per cent.
But the top three risers were all miners. Anglo American, Kazakhmys and Vedanta were all more than three per cent up. Antofagasta was another significant riser in the sector, up more than two per cent.
The miners were boosted by more M&A talk, following the announcement of the proposed merger between Glencore and Xstrata, as it was reported Canadian metals and coal miner Teck Resources may be building a stake in Australia’s third-largest iron ore producer Fortescue Metal Group.
Vodafone nudged up by 0.8 per cent after it announced that it was weighing up whether to make a bid for Cable & Wireless Worldwide.
There were few fallers on the blue chip index with Tesco and cruise ship group Carnival edging down marginally. Reports said that oil was being pumped out of Carnival’s stricken Concordia ship which sank on an Italian pleasure cruise.
Among the other fallers on the FTSE 100 were defensive stocks such as Rolls Royce, Reckitt Benckiser and Smith & Nephew as appetite for safer assets faded.
In Asian corporate news camera maker Olympus – struggling after a damaging accounting scandal – announced that it was heading for a £261m loss for the full year.
The Nikkei and the Hang Seng both closed 0.5 per cent up after the Greek deal which should release bailout funds which bring the country back from the brink of default.
Meanwhile in its latest economic forecast, the Confederation of British Industry lowered its forecast for British growth this year to 0.9 per cent from the 1.2 per cent it predicted in November, though this was in response to an economic contraction recorded in the last three months of 2011.
And Britain’s top banks fell short of their government targets to lend to small businesses last year, Bank of England data showed.
The BoE said the five banks that signed up to the Project Merlin deal failed to meet their target for lending to small and medium-sized businesses, making £74.9bn, around £1bn below the £76bn target.
However, the overall target for business lending was hit.