Miners lead FTSE rally

Mining stocks led Britain's top share index up on Friday, rallying after big falls on Thursday, but the FTSE 100 still scored a hefty loss on the week as interest rate worries persisted.
Thursday's biggest fallers were among Friday's biggest gainers as gold and copper prices rebounded, pushing Anglo American up 4.9 percent and prompting gains of up to 4.3 percent in Xstrata and Rio Tinto.
Shares in UK medical devices maker Smith & Nephew closed 4.3 percent higher at 434 pence as bid speculation returned, with traders pointing towards possible interest from US healthcare firm Johnson & Johnson.
The FTSE 100 index closed up 92.3 points, or 1.7 percent, at 5,655.2, rallying after Thursday's 143-point fall, which sliced 35 billion pounds off the value of the index.
Shares are still prone, however, to bouts of volatility while investors try to anticipate the scale and pace of future interest rate moves as authorities move to contain inflation. Higher interest rates can damp down consumer activity and eat into corporate profitability.
Tim Rees, director of investment strategy at asset management group Insight Investment said he did not see any reason for shares to fall much further, despite the market's current uncertainty.
"The valuation support seems alright. I can't get too worried about the economy. I think monetary authorities around the world would be only too glad to get back to a more neutral environment in terms of rates," he said.
"The question is if it's not going down, then when can it recover? It will probably recover when people have seen fears of a sharp growth slowdown or rising inflation to be wide of the mark. But that may take three or four months before the market feels reassured. Then the question is what leads the market higher?"
Midcap software company Misys was the biggest riser in the top 350 British shares, up 21.4 percent at 221p after the firm said it had received a request from members of senior management about making a possible offer for the company. Traders said an offer might emerge at around 245p.
A statement said an independent committee of the Misys board had been established to consider the request, adding the company had not yet received an offer, nor had price been discussed.
Traders say the stock market slide that has dragged leading UK shares down from near five-year highs since mid-May could be regenerating talk of US interest for Smith & Nephew shares. The shares in March topped 555p on speculation J&J or Bristol-Myers Squibb could be interested in a move.
"I heard that Johnson & Johnson thought that over the last few days Smith & Nephew had fallen to an area where it might be worth them getting back into play," said a trader.
Fund manager Man Group also stood out with a 2.7 percent rise after brokerage Bridgeable upgraded the stock to "buy", saying the shares had been badly hit by the market sell-off.
"However, from an operational perspective, the current market turmoil will create opportunity, rather than take it away. We expect the shares to remain volatile, but we believe that investors looking for an entry point would do well to utilise the current share price weakness to buy," the brokerage wrote in a note to clients.
Northern Rock joined the group of resources stocks among FTSE 100 gainers, up 3.8 percent after an upbeat note from Merrill Lynch on the mortgage bank.
"Northern Rock is trading on just 9.5 times 2007E earnings despite having 15 percent forecast earnings growth, and we believe that the risk to those earnings numbers is on the upside. For those investors that are more cautious, we think Northern Rock also fits the bill with a full 90 percent of its loan book in low-risk mortgages," the investment bank wrote in a note to clients.
Among retailers, jewellery chain Signet added 4 percent as strong US sales lifted its first-quarter profit.
Software provider ISoft rebounded 13.2 percent after slumping nearly 40 percent on Thursday when the group said its annual profits would be lower than expected because of a change in accounting policy.