Britain's top share index set a near 11-month closing high on Tuesday as economic figures from the United States helped turn the market positive, with stronger oils and banks outweighing weaker mining stocks. The index ended 20.57 points higher at 4,916.80 - its highest close since early October after a sixth straight session of gains.
The index is up 11 percent this year and has jumped 42 percent from a low hit in March. "We've seen a bit of rotation, some profit taking this morning, which is a healthy thing. But this is a market that is not to be denied," said Stephen Pope, chief global strategist at Cantor Fitzgerald. The positive newsflow emanating from the United States this afternoon and the slight strengthening in the Shanghai market towards its close helped a turnaround, Pope added.
US consumer confidence increased in August to 54.1 from an upwardly revised 47.4 in July, more than expected, the Conference Board said. The S&P/Case-Shiller home price index also rose in June for a second straight month. Ben Bernanke's renomination as US Federal Reserve chairman also cheered investors. Royal Dutch Shell and BG Group were up 0.9 to 1.6 percent.
However, Cairn Energy lagged, down 1.4 percent, as the oil explorer said its large Indian oilfields would begin producing oil this week but warned in its half-yearly report that meeting targets for the next stages of the development was becoming increasingly challenging. Royal Bank of Scotland rose 3.9 percent, with traders citing talk that the lender was looking to buy back shares from the UK government.
RBS was not immediately available for comment. Elsewhere, talks to sell some of RBS's Asian assets to Standard Chartered remain "in full swing", sources familiar with the matter said after a newspaper report said they were on the rocks. The state-controlled bank also announced plans to cut pension benefits for tens of thousands of UK employees as it reins in costs, angering unions which accused the lender of dealing a "body blow" to staff.
Other banks were mixed, with HSBC and Barclays 1.0 and 0.1 percent higher respectively, while Lloyds Banking Group and Standard Chartered shed 0.1 and 2.2 percent respectively. Heavyweight Vodafone was also a top blue chip riser, gaining 2.4 percent as J.P. Morgan upgraded its strategy stance on the European telecoms sector to "overweight" and advised exposure to the British mobile telecoms stock.
The investment bank said the telecoms sector is favoured by cheap valuations, increasingly stable and predictable results and seasonal trading patterns that has led it to consistently outperform in the final months of most years since 1995. Other defensive stocks also gained. United Utilities, Severn Trent and Pennon Group were up 0.1 to 2.2 percent. Food retailer J Sainsbury added 0.3 percent while general retailer Marks & Spencer rose 1.1 percent.
Miners were the main negative influence as copper prices weakened, reflecting further uncertainty over a recovery in China. Chilean copper miner Antofagasta was among the top blue chip fallers, down 3 percent ahead of first-half results due on Wednesday, while Eurasian Natural Resources, Kazakhmys, Xstrata, Rio Tinto, and BHP Billiton all shed 1.1 to 3.5 percent. BHP Billiton, the world's biggest miner, will cut up to 70 jobs at its Mt Keith nickel mine in Australia to ensure the operation's viability, it said.
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