Britain's leading shares ended 1.1 percent higher on Friday as miners and oil companies gave the FTSE 100 a boost, but broker downgrades hit several stocks, most notably Yell Group. The FTSE 100 ended up 59.9 points at 5,784.0 in choppy trade after earlier falling as low as 5,703.1.
Late in the session, the blue chip index staged a recovery after US markets reversed early losses, but the FTSE 100 still lost 4 percent during the week. "It's been another frantic week of ups and downs," said Angus Campbell, head of sales at Capital Spreads. "The picture that is being painted at the moment is not a pretty one... The state of the US economy is becoming very, very clear... they are already in recession, I think we all know that."
Miners dominated gainers as metal prices rose and mergers and acquisitions activity continued. Kazakhmys climbed 5 percent, Antofagasta gained 6.3 percent and Vedanta Resources tacked on 4.1 percent.
Xstrata added 1.5 percent after Brazil's state development bank BNDES said it saw no reason to oppose local mining giant Vale's attempt to buy the Swiss-based miner. Xstrata also raised its cash offer for Australian coal miner Resource Pacific Ltd by 12 percent to A$1.08 billion ($964 million) and declared it final. Oil rose more than $1 to above $89 a barrel, as traders bought back short positions after prices failed to break below the $86 mark and on expectations cold US weather would boost fuel Oil major BP was 2.1 percent higher and gas producer BG Group was up 4.7 percent.
The world's biggest caterer Compass added 4.1 percent after it said operating profit was marginally ahead of expectations and that it was coping with food price inflation.
Shares in index-heavyweight Vodafone jumped more than 2.5 percent. British waste collection company Biffa rose by 12.7 percent after it agreed to a 1.2 billion pound ($2.34 billion) take-over by a private equity consortium, yet left open the chance of another bid emerging. A host of companies suffered a series of downgrades and price cuts following updates the previous day.
British-based directories business Yell Group fell to an all-time low after BNP Paribas cut its rating to "neutral" from "outperform" and Credit Suisse trimmed its price target to 275 pence from 480 pence. The stock lost 6.3 percent, making it the top decliner on the FTSE benchmark.
British engine maker Rolls-Royce shed 4.4 percent after both Dresdner and Morgan Stanley cut their price targets on the stock. Drugmakers extended losses from the previous session. GlaxoSmithKline took a beating on Thursday after the drugmaker warned 2008 earnings would fall due to sliding sales of diabetes drug Avandia and more generic competition.
WestLB, Citigroup and Goldman all cut their price targets on GSK, which ended down 0.7 percent. AstraZeneca fell 1.6 percent and Shire was down 1.9 percent. "With the FTSE 100 having spent much of the past few days in decline, next week could well be crunch time," said David Jones, chief market strategist at IG Index.
"Over the past couple of weeks the 5,700 mark has helped support the market - investors may view any move down through here as a sign the trapdoor is opening once again."
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