Britain's leading shares cruised to their biggest weekly gain in over six months on Friday, ending a volatile week on an upbeat note as rallying banks, miners and oil stocks combined with moderate US inflation data to put the market firmly in positive territory.
Miners, the driving force behind the benchmark FTSE index's recent swings, were among the biggest gainers. Kazakhmys ended up nearly 6 percent, followed by gains of over 4 percent each for Anglo American, Xstrata and BHP Billiton.
Steelmaker Corus also climbed the leaderboard, finishing up 3.4 percent on hopes for sector consolidation after France's Arcelor announced plans to buy Russian rival Severstal.
By the close of play, the FTSE 100 share index was up 113.3 points, or 2 percent, at 5,791 - a rise that brought its weekly gain to 2.4 percent and left the FTSE at the top of a 130-point trading range during the week. Total turnover reached 2.6 billion shares.
It was a bullish day among smaller stocks as well, with the FTSE 250 mid-cap index charging 3.5 percent higher and logging its biggest weekly increase since March, a gain of 3.4 percent.
Despite the weekly increase, the FTSE 100 still stands nearly 6 percent below the five-year highs it struck in April, and analysts are split as to where it will go from current levels.
"I always come back to the question of valuation. The FTSE 100 is on a price-earnings ratio of 12.4 times," said Edward Menashy, an economist and strategist at brokerage Charles Stanley. "Unless the world comes crashing down, we are getting really very good value for the market. Next year are we going to have a huge fall in corporate earnings? The answer is no."
The latest US data helped to soothe some nerves as inflation and consumer confidence nearly matched expectations and were interpreted by investors as doing little to increase the chance of another interest rate hike from the Federal Reserve in June.
But some market watchers, including investment bank Merrill Lynch, are taking a more cautious stance, saying that now is not the time to return to stock market as more down-legs are on the way.
Among individual stocks, airports operator BAA rose 4.2 percent after Spain's Grupo Ferrovial said it would cooperate with any regulatory review of the UK airports market if its 8.75 billion pound offer were successful. Dealers said concern that the Spanish company may be cooling on its bid plans has bedevilled the stock recently.
Elsewhere on the merger and acquisition trail, department store group House of Fraser jumped over 4 percent to 132 pence after the Daily Telegraph said Icelandic predator Baugur was ready to make a bid.
HSBC was a talking point in the banking sector, with its shares up 1.7 percent after Europe's largest bank said the outlook for 2006 remained encouraging.
On the downside, spread-better IG Group led the fallers' list with a loss of 1.4 percent on disappointment that Nat le Roux, its chief executive who re-listed the firm last April, planned to step down.
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