Britain's FTSE-100 share index ended a long losing streak on Thursday, closing higher for the first time in eight sessions after strong US data, with banks and oil shares leading the way higher.
Medical devices company Smith & Nephew was the top blue chip gainer, up 4.2 percent helped by a US broker's upgrade for US-based orthopaedic device maker Biomet.
Dealers added that S&N had attracted fresh bid talk but could not give any details. Speculation about a bid for S&N has flared intermittently since it lost out to Zimmer Holdings last year in a bid battle for Swiss rival Centrepulse.
The blue chip index closed 22.7 points higher at 4,381.1, down 138 points since the index last scored a closing gain on June 28, but ending its worst losing run since an 11-day sequence in January 2003.
Market watchers said an unexpectedly steep fall in US jobless claims went some way to soothing nerves which had been frayed by a weak recent US jobs report and some concerns that US earnings momentum could be set to wane.
"I don't particularly like the market here. You can put up a very good bearish argument at the moment. There's a high oil price, the US jobs numbers weren't particularly wonderful, the numbers we've been seeing from the Street aren't wonderful. You feel it could trade down to 4,200," said one dealer, however.
Andrew Hobson, a fund manager at Exeter Asset Management, took a more positive view of US earnings potential.
"We've only just started the second quarter reporting in the United States. It's been a bit disappointing so far but we've got a lot of results to come yet. Expectations have been for good levels of growth, that's a potential catalyst to get the market higher in the near term," he said.
Britain's biggest clothing retailer Marks & Spencer closed 1.2 percent down at 364p after rejecting Wednesday's proposed 400p per share cash offer from retail tycoon Philip Green.
Marks & Spencer said a turnaround strategy to be presented by Chief Executive Stuart Rose on Monday would yield greater shareholder value, while some observers believe Green may yet switch tack and bid for the firm without the board's approval.
Oil shares stayed firm, buoyed by recent high crude prices, with BP closing 1.3 percent up and Shell up 0.4 percent. Banks rebounded, led by HBOS, up 1.6 percent after investment bank Morgan Stanley upped its rating.
Elsewhere, features piled up on the downside with British Airways down 2.9 percent after Dutch banking group ABN Amro cut its rating to "hold" from "add".
Heavyweight drinks group Diageo fell 1.7 percent after it warned of the impact of the weaker dollar, margin declines and static sales growth. Traders said Diageo's fall was deepened by talk that house broker Cazenove had downgraded its earnings estimate.
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