FTSE keeps rallying

British blue chip shares rose on Monday for the fourth day in a row, hitting their highest close in over four months, driven by commodity stocks as crude oil held within sight of recent record highs and as positive broker comment helped miners.
Index heavyweights Royal Dutch Shell and BP were up between 1.3 and 3 percent, while Cairn Energy and Tullow Oil were up between 2 and 3 percent, as crude oil held above $126 a barrel.
Miners were in demand as precious metals rallied. Large-caps BHP Billiton, Rio Tinto, Anglo American and Xstrata rose between 1.6 and 4 percent. Vedanta Resources shot up nearly 9 percent after a rating upgrade from Citi, while Kazakhmys rose 6 percent after Credit Suisse added the stock to its Europe focus list.
"At the start of the rally back in late March, there was a lot of short covering and now you sense there is a fear among buyers thinking 'I missed out on almost 1,000 points, I need to get back in before (the index) goes up another 1,000 points'," said Jim Wood-Smith, head of research at Williams de Broe.
"A rising market builds its own momentum." The FTSE 100 closed up 72.2 points, or 1.15 percent at 6,376.5 points, hitting its highest closing level in just over four months. The FTSE has risen for four consecutive trading days, making this its best run since a six-day rally in mid-December.
The FTSE has fallen by about 1.2 percent so far this year, but has rallied by nearly 18 percent since mid-March, in spite of a stream of downbeat news on the British economy and a high degree of uncertainty over the outlook for the US economy as inflation persists and growth slows.
"There is a signal that the US did not go into recession. We are beginning to sense that earnings from the non-financial sector were generally far better than expected," said Stephen Pope, head of equity research at Cantor Fitzgerald.
"The fact we broke through the 6,227 level was very encouraging and I imagine we are now going to press up, not in a straight line, around the 6,420-6,450 level," Pope said, looking at the FTSE 100 chart.
The pharmaceutical sector was among the top performers on the FTSE, after European authorities approved the first pre-pandemic bird flu vaccine, Prepandrix, made by GlaxoSmithKline.
Glaxo stock rose 1.2 percent to rank it among the top ten positive weights on the FTSE, while AstraZeneca rose nearly 3 percent, driven by market talk of a possible bid from US rival Pfizer. An Astra spokesman declined to comment.
Shares in mid-cap kitchen equipment maker Enodis rose 2.4 percent after US diversified manufacturer Manitowoc said it had raised its bid for the company to 1.08 billion pounds ($2.1 billion) to trump a rival offer. Banks were the heaviest negative weight on the index, although the sector did pare losses as the session wore on.
Among the mid-caps, specialist mortgage lender Bradford & Bingley slid nearly 16 percent to an all-time low, hit by concerns over its 300 million pound cash call and the future of its chief executive, as well as over its outlook in deteriorating markets, with some analysts already valuing the firm as if it is no longer writing new business. Royal Bank of Scotland fell nearly 4 percent, which dealers blamed on technical factors related to its shares trading "ex-rights" and the glum mood surrounding both the stock and the UK banking sector.
HBOS, Lloyds TSB and Alliance & Leicester were all down between 0.7 and 2.4 percent, while Barclays and HSBC pared earlier losses to trade up between 0.6 and 0.7 percent.
Other decliners included BAE Systems which shed 1.8 percent after the company said US officials investigating alleged bribes in a Saudi arms deal subpoenaed its chief executive Mike Turner and non-executive director Nigel Rudd.