Miners and banks drive FTSE rally to fourth day

By Simon Falush

LONDON (BestGrowthStock) – Gains from miners and banks pushed Britain’s top share index higher for a fourth day by Friday’s close as recovering risk appetite helped it post its strongest weekly gain in a year.

The FTSE 100 (.FTSE: ) index ended up 27.49 points, or 0.5 percent, at 5,132.94, having closed higher for a third consecutive day on Thursday, bringing its weekly gains to 6.1 percent.

Miners provided much of the upside on the FTSE 100, tracking firmer base metal prices.

The demand outlook for raw materials improved after data on Thursday showed a fall in new weekly U.S. claims for unemployment benefits, offering cautious hope for the economic recovery that had been showing signs of fatigue.

Antofagasta (ANTO.L: ) was the top performer, up 4.1 percent, helped by a Citigroup upgrade to “buy” from “hold.”

Despite this week’s gains, the index is still down 11.9 percent since mid April when fears about euro zone sovereign debt and the prospects of a double-dip recession began to spook markets.

“We were feeling massively undersold, we are seeing more orders and reasonable confidence from industrials companies, so far from being a double-dip, it might be that we will see a more sustainable recovery,” said Tim Rees, fund manager at insight Investment.

Volumes were light with the index trading less around 70 percent of its 90-day average volume as many investors chose to sit on the sidelines ahead of the second-quarter reporting season from the U.S., which kicks off next week with Alcoa (AA.N: ).

“Next week should be a interesting week for the market,” said Jimmy Yates, head of equities at CMC Markets.

“When those earnings start coming in we’ll get a clearer sense of direction and whether clients feel that we can push on from here.”

FINANCIALS FIRMER

Banks and insurers which tend to benefit from increased appetite for risk were big gainers on the FTSE 100.

Part-nationalized lender Lloyds Banking Group (LLOY.L: ) was 1.7 percent higher, continuing to respond well to Thursday reports that two senior banking figures have joined forces to back a new bid vehicle which will list on the London stock market and look to purchase British banking assets.

Peers HSBC (HSBA.L: ) and Standard Chartered (STAN.L: ) rose 0.6 and 1.4 percent respectively.

Other financials also featured on the upside, with Legal and General (LGEN.L: ) up 2.7 percent and Prudential (PRU.L: ) 3.7 percent higher.

Stocks seen as defensive were among the blue-chip fallers as investors’ risk appetite partly remained, with National Grid (NG.L: ) and industrial property company Segro (SGRO.L: ) off 1.4 and 1.6 percent respectively.

BP (BP.L: ) was a heavy weight on the index, down 1.4 percent as traders booked profits following a 20 percent rise since June 29.

The stock, however, remains down over 44 percent since its major oil spill began in the Gulf of Mexico in late April.

British factory gate inflation slowed more than expected to a three-month low in June but Britain’s trade gap for goods and services unexpectedly hit its widest since July 2008, official data showed on Friday.

(Additional reporting by David Brett; Editing by Jon Loades-Carter)

Miners and banks drive FTSE rally to fourth day