Banks, commods help FTSE to 6th day of gains

By David Brett

LONDON (BestGrowthStock) – Britain’s top shares climbed for the sixth consecutive session on Tuesday, led by banks on optimism that U.S. peers would post strong earnings and lift the sector, and that Europe’s lenders would pass a key stress test.

The FTSE 100 (.FTSE: ) closed 104 points, or 2 percent, higher at 5,271.02, hitting its highest close in over two-weeks, having rallied over 9.5 percent since the index hit its 2010 low on July 1.

“There’s a bit optimism creeping in about the earnings numbers,” said Phil Roberts, chief European technical analyst at Barclays Capital.

“The doom and gloom stopped at the half-year end. There was a lot of position-squaring … and from that point on the market has recovered.”

However, the index had further technical hurdles to clear, he added.

“It’s not yet in the clear on its top-side, it’s not yet above its 200-day moving average — 5,322 points — and still below its June high so there’s still significant resistance to be overcome.”

Banks were the biggest blue-chip gainers, lifted by hopes that important U.S. banks reporting over the remainder of the week, including JP Morgan, Citigroup and Bank of America, would show the sector in good health.

Support for the sector also came from a report German banks were set to pass a European stress test to assess their financial health.

Among banks, Barclays was the best sector performer, up 4.3 percent, while Royal Bank of Scotland (RBS.L: ) and Lloyds Banking Group (LLOY.L: ) took on 3.9 and 2.6 percent, respectively.

Metals firm Alcoa (AA.N: ), the largest U.S. aluminum producer, lifted its outlook for global consumption of the metal and posted strong quarterly results after Wall Street’s close on Monday.

Miners rallied from earlier falls, led by Eurasian Natural Resources (ENRC.L: ), up 3.3 percent, and precious metals group Johnson Matthey (JMAT.L: ), up 3.6 percent, as investors focused on the solid Alcoa earnings.

Reports that China would not relax tougher property measures anytime soon had earlier added to worries from recent data showing the demand outlook from the world’s biggest consumer of metals could be tightening.

AGGREKO RISES

Temporary power supplier Aggreko (AGGK.L: ) was the top FTSE 100 gainer, up 4.3 percent in this session and over 10 percent since July 7, with traders citing recent positive broker coverage and ongoing vague talk of bid interest.

Microchip designer ARM Holdings (ARM.L: ) rose 3.3 percent as investors awaited second-quarter numbers from U.S. chip giant Intel (INTC.O: ), due out after the Wall Street close on Tuesday.

Testing firm Intertek Group (ITRK.L: ) rose 4.0 percent helped by a bullish Merrill Lynch note which said the company was a preferred play in the sector, and raised its target price.

Elsewhere with the FTSE 100 risers, food and tobacco issues were in demand led by Unilever (ULVR.L: ) and British American Tobacco (BATS.L: ), up 2.9 and 2.6 percent, respectively, as Goldman Sachs upgraded its ratings for both.

Integrated oils were higher, led by a 2.9 percent gain for BP (BP.L: ) on a mixture of asset sale hopes, bid possibilities, and positive news from its efforts to contain the Gulf of Mexico oil spill.

BP said late on Monday it had installed and was ready to test a cap that, if successful, would for the first time stop the oil spewing from its ruptured well on the seafloor.

BP also said on Tuesday that talks on divestments were making progress.

“BP is bouncing back from a very low base, of course, but the closer we get to the resolution of the spill, the greater chance there is we (will) get back to a reasonable valuation,” said Henk Potts, equity strategist at Barclays Wealth.

BP shares have risen 38 percent since hitting near 14-year lows on June 25, but they remain down 38 percent since the spill began in late April.

Among the other oil blue chips, Royal Dutch Shell (RDSa.L: ) gained 2.1 percent, and BG Group (BG.L: ) added 1.1 percent as the crude price rallied.

(Editing by Simon Jessop)

Banks, commods help FTSE to 6th day of gains