Britain's FTSE-100 share index ended at a two-month high on Wednesday, lifted by oil shares amid news of a slide in US crude stocks, while talk of a new offer for Abbey National stirred banks.
UK property firm Land Securities led the pack, with a 3.5 percent boost from brokerage Cazenove, which issued a note valuing Land Securities subsidiary Trillium, dealers said. British Land rose 2.4 percent.
The FTSE-100 closed at 4,502 points, up 42.7 points or about 1 percent at its highest closing level since late June.
The market advanced although oil prices pushed up by more than a dollar on Wednesday after a US government report showed crude stocks at their lowest level since March as refineries struggled to meet summer demand.
Stock markets were not rattled, as crude prices are still around $6 off an August record high that dragged the UK share index down as investors counted the cost of high crude prices to corporations.
As Merrill Lynch raised its average oil price forecasts, BP rose 2.2 percent and Shell 1.1 percent, while natural gas concern BG Group rose 2.2 percent.
Dealers cited talk of an HBOS bid for Abbey National that would trump a rival offer by Santander Central Hispano's, but stressed it was vague, and a source familiar with the situation quashed talk a new bid would come today. Abbey closed up 0.9 percent.
Elsewhere in the financial sector, hedge-fund manger Man Group rose 0.9 percent as the market reassessed the stock after a period of weak performance by its key fund. Amvescap rose 2.9 percent on hopes of a close to a long-running US investigation.
The FTSE-100 more than recovered from a 31 point decline posted on Tuesday after August retail sales showed the slowest growth in more than a year, a casualty of bad weather and higher interest rates.
Concerns about the timing and broader impact of higher interest rates have left investors sitting in cash that could be released to fuel further gains in the FTSE, Tim Rees of Insight Investment said.
"It is easy to understand why some fund managers sit on the sidelines in a rising interest rate environment," Rees said. "It may well be their worst fears prove unfounded."
Retailers remained the weak spot in the FTSE-100, with Tesco and Sainsbury down by about 0.9 percent each.
In the UK, a Nation-wide report on house prices came in weaker than expected, adding to pressure on construction stocks, star performers during the UK property market boom.
"It seems they are probably getting to the top of their levels," one trader said. "They have done enough and they are going to consolidate."
Wilson Bowden warned that rising interest rates were hurting property prices, adding to pressure on building stocks. Wilson Bowden itself closed down 0.5 percent even though it posted a 29 percent increase in pre-tax profit.
Comments
Comments are closed.