Britain's top share index jumped 1.9 percent on Thursday, boosted by strong banks ahead of Friday's European stress test results, and by firmer miners and oils as US stocks rallied on earnings and data. At the close the FTSE 100 was up 99.17 points at 5,313.81, ending above 5,300 for the first time since May 18, the day before Germany introduced a short-selling ban at the height of the eurozone sovereign debt crisis.
The gain took a two-day rally by the UK index to 3.3 percent after it snapped a five-session losing streak on Wednesday. "Strong rallies have not been scarce over the past couple of months but they have ultimately come to nothing," said Yusuf Heusen, senior sales trader at IG Index.
"The real test over the next couple of days is whether shares can build on the recent gains to push higher still and finally shake off the wary attitude investors have had for some time," said Huesen. Banks provided the main strength for the blue chips, with Barclays the best sector performer, up 4.6 percent. The results of an examination by regulators of the financial strength of banks across Europe are due on Friday.
The banking sector was also boosted by recent results from US peers in the last week, while Credit Suisse was the first of the big European investment banks to report on Thursday. US blue chips were up 2.1 percent by London's close, lifted by a further batch of positive corporate earnings news, and by data showing that US existing home sales fell less sharply than expected in June. There was some positive economic data, as British retail sales volumes received a World Cup boost in June after strong sales of electrical goods drove a faster than expected 0.7 percent monthly rise, official data showed.
Miners pushed higher in London, led by Kazakhmys up 5.2 percent, as metals prices firmed helped by the US data, with copper hitting its highest level in nearly two months.
Energy stocks also benefited as crude prices moved higher, with BG Group and Royal Dutch Shell adding 1.8 percent and 2.4 percent respectively. But BP was flat as investors worried about the possible impact of a storm on the firm's operations to end the worst oil spill in US history.
Among individual stocks, Rolls-Royce was the top FTSE 100 gainer, up 5.5 percent as investors' cheered the flow of orders booked by the aero engines firm at the Farnborough airshow this week. Invensys also stood out, up 5.2 percent as an old rumour was revived that the firm could be a bid target for Germany's Siemens.
"The recent bid approach for Tomkins, and yesterday's offer for SSL from Reckitt, have just stirred up some of the old chestnuts," said one trader. Software firm Autonomy was the top FTSE 100 faller, down 9.1 percent after second-quarter earnings. "We estimate that after adjusting for one-offs, Autonomy failed to grow its core business in Q2 2010," KBC Peel Hunt said in a note, maintaining its "sell" rating. And Imperial Tobacco shed 2.9 percent after it said cigarette volumes fell 4.3 percent in the nine months to June.
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