Britain's top shares closed sharply higher on Tuesday as Barclays led a banking sector rally after its 2009 forecast-beating results, and oils and miners were buoyed by firmer commodity prices. The FTSE 100 ended up 76.59 points, or 1.5 percent, at 5,244.06, extending gains into a second consecutive session after closing 0.5 percent higher on Monday.
Barclays was the top blue chip riser, up 6.8 percent, after saying it had started the year well and beating expectations with a 2009 profit of more than 11.6 billion pounds ($18.2 billion) on the back of a strong performance at its investment banking unit. Lloyds Banking Group rose 4.7 percent and Royal Bank of Scotland added 5.3 percent. Both are scheduled to report results next week.
RBS said it was selling the non-US assets of its RBS Sempra Commodities joint venture to J.P. Morgan for $1.7 billion. HSBC and Standard Chartered also gained, they put on 1.6 and 2.5 percent, respectively. "At the moment equities are still providing a decent return compared to other instruments, which is why the market's still well supported," said Philip Gillett, sales trader at IG index.
"Whether or not this rally still has further to go I am not sure. I still think we are in for a sideways period." A gauge of manufacturing in New York state rose in February as inventories jumped, the New York Federal Reserve said in a report on Tuesday. The news added to the feel-good factor and boosted demand for commodities as prices in metals and crude oil surged as the US dollar weakened. Miners Eurasian Natural Resources, Vedanta Resources, Randgold Resources and Fresnillo were among the best off, rising 3.9 to 5.2 percent.
Anglo American climbed 3.8 percent after selling its Tarmac construction businesses in France, Germany, Poland and the Czech republic to Eurovia, a unit of France's Vinci. BHP Billiton put on 3.1 percent, also helped by an upgrade to "buy" from ING, while Rio Tinto added 2.5 percent, helped by a target price hike from the same broker.
Oil and gas producers Royal Dutch Shell, BP and BG Group climbed 1.6 to 2.2 percent. Broker Bernstein also weighed in with an upgrade to "outperform" for Shell. Life insurer Legal & General rose 4 percent ahead of its fourth-quarter new business figures due out on Wednesday. Positive broker sentiment aided drinks firm Diageo, up 1 percent after a price target hike to 1,070 pence from 985 pence by ING.
Selected defensive stocks were lower as appetite for risk remained strong. Imperial Tobacco was among the top FTSE 100 fallers, dropping 1.7 percent, knocked by a downgrade in rating to "neutral" from "buy" by Nomura. British American Tobacco was down 0.9 percent.
AstraZeneca fell 0.5 percent after it waded into the competitive rheumatoid arthritis market by signing a deal worth up to $1.245 billion for rights to Rigel Pharmaceuticals' next-generation drug R788. intercontinental Hotels was the biggest blue chip faller, off 2.9 percent after the world's biggest hotelier said trading would stay tough until business travellers returned in greater numbers, as 2009 profit fell 34 percent but still beat forecasts. Consumer goods group Reckitt Benckiser dropped 1 percent.
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