Miners, banks and oil groups emerge as stars of the index
LONDON’S top share index closed up 0.9 per cent yesterday, led by miners, banks and oil producers as impressive corporate data from the United States outweighed mixed economic figures.
The FTSE ended 35.55 points higher at 4,237.68, extending Monday’s 1.8 per cent gains. The index has risen more than 23 per cent since hitting a six-year low in March, but is still down 4.4 per cent for the year.
Impressive figures from Goldman Sachs, Wall Street’s largest surviving bank, and Johnson & Johnson offset an unexpected jump in producer prices in the US, which came in at more than double economists estimates.
“Given the recent weakness in markets we have seen, the second-quarter results season should trigger a little bit of a mini rally. If we don’t rally, then we could see the FTSE in sub-4,000 territory,” said Paul Kavanagh, a partner at Killik &Co.
Banks gained positive momentum after Goldman Sachs said its quarterly earnings surged 33 per cent on strong trading results.
Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland put on between 1.2 and 2.1 per cent.
Miners were the top sector gainers as investor optimism of even higher metals prices drove stocks north.
Fresnillo, Lonmin, Kazakhmys, Antofagasta, Xstrata and Rio Tinto added between 5.1 and 13.3 per cent.
Insurers were also strong. Aviva, Friends Provident, Old Mutual and Prudential rose between 0.9 and 3.5 per cent.
Energy stocks pushed higher, as crude CLc1 stayed above $60 a barrel. Cairn Energy, BP, BG Group and Tullow Oil climbed 0.4 to 4.9 per cent.
Kavanagh said the focus will be on corporate earnings given the mixed picture of the wider economic outlook.
The British Retail Consortium said retail sales rose in June and house prices in England and Wales fell at their slowest annual pace in almost two years last month.
However, ministers in Britain took a more cautious tone.
Chancellor Alistair Darling said there was still a lot of uncertainty, while business secretary Peter Mandelson said the fall in the economy was coming to an end but the “severity, obviously is not yet behind us”.
Vodafone was the biggest single drag on the bluechips, down 1.9 per cent, after a downgrade from UBS to “neutral” from “buy” and a cut in the price target chilled appetite for the telecoms giant.