Britain's leading share index rose for the sixth session in a row on Tuesday, with mining stocks leading the way on firmer metal prices while drugmakers also gained after recent weakness. Heavyweight miners contributed the most points to the FTSE 100 as copper, nickel, aluminium and zinc prices rallied.
Xstrata soared 13.4 percent, Vedanta Resources surged 11.3 percent, Rio Tinto jumped 11.1 percent, Antofagasta climbed 7.9 percent and Eurasian Natural Resources gained 11.2 percent. The British benchmark ended up 59.28 points, or 1.3 percent, at 4,638.92, after gaining 8.6 percent in the previous five sessions. The FTSE 100 fell 31 percent last year.
"We are trading at the highest we have been in the last 42 trading days," said Tom Hougaard, chief market strategist at City Index Markets. "We are overdue for a good rally, and that rally could take us up to 5,000 again. But over the next couple of days it wouldn't surprise me to see the market come down a little bit to consolidate the gains."
Drugmakers caught up with the market rally following recent weakness. AstraZeneca, GlaxoSmithKline and Shire put on between 2.2 and 3.5 percent. Oil producers were weaker, with BP and Royal Dutch Shell down 0.2 to 1 percent. Banks, at the epicentre of the financial storm and which had lost almost 57 percent last year, were also mostly weaker with the FTSE 350 banks index down 1.1 percent.
HSBC, Royal Bank of Scotland and Lloyds TSB were down 2.9 to 5.3 percent. But Standard Chartered, Barclays and HBOS rose 1.4 to 8.2 percent. Bucking the trend in the financial sector, hedge fund Man Group jumped 17 percent after it said the net asset value of its Athena Guaranteed Futures rose almost 25 percent in the past 12 months.
Private equity firm 3i topped the FTSE 100 gainers' list, up more than 21 percent on buying by bargain hunters after concerns over the group's prospects pushed the stock to multi-year lows in late 2008, analysts said. Fashion retailer Next and FTSE 250-listed Debenhams leapt 12.5 percent and more than 20 percent respectively despite posting falling sales, as investors were relieved that the slide was not greater.
Marks & Spencer rose 3.8 percent ahead of its trading update on Wednesday. The Times reported on its Web site that the retailer was set to cut more than 1,000 jobs following disastrous Christmas trading. A spokesman for M&S declined to comment.
However, the outlook for the retail sector remained glum. British consumer morale sank in December as worries about job losses resulting from the downturn intensified, with the Nation-wide Building Society saying its confidence gauge fell to its lowest since the survey began in 2004, and Britain's service sector shrank at a near-record pace last month.
All eyes will be on Bank of England's interest rate decision on Thursday. A Reuters polls showed the BoE would cut rates by another 50 basis points to 1.5 percent. Among other individual movers, platinum processor Johnson Matthey lost 3.8 percent after Citigroup downgraded the stock to "hold" from "buy".
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