Britains leading share index ended 2.9 percent higher on Monday, registering a sixth successive gain in seven sessions fuelled by strength in banks and oil majors, and with US blue chips up strongly. At the close, the FTSE 100 was up 110.31 points at 3,863.99.
The UK blue chip index rose 6.3 percent last week, rallying after hitting six-year lows, but is still down around 13 percent in 2009 hurt by the recession and the banking crisis. "Markets have continued their winning streak with the FTSE putting more distance between itself and the 3,500 level," said David Evans, market analyst at BetOnMarkets.com.
"Objectively the overall economic news flow hasnt changed significantly, but investors are now willing to put a positive spin on the news. A month ago, the same news flow may have had the opposite effect. Perhaps now investors have become inured to the bad news." Barclays was the top blue chip performer, jumping 22.7 percent after confirming that it was looking to sell its i-Shares business and had talked to several interested parties.
The bank also said it has had a strong start to 2009. Index heavyweight HSBC rose 6.7 percent after the bank confirmed that it had reassured investors in Hong Kong that it did not need to raise more capital, after its recent launching of a 12.5 billion pounds rights issue. Royal Bank of Scotland and Lloyds Banking Group gained 2.6 and 6.1 percent respectively. Heavyweight drugmakers were positive as the sector rally continued helped by recent sector consolidation moves.
AstraZeneca, GlaxoSmithKline, and Shire added between 2.5 percent and 5.57 percent. Oil majors also provided a boost as crude prices recovered from earlier falls, pushing back above $47 a barrel, shrugging aside Opecs decision to keep output quotas unchanged. BP, BG Group, and Royal Dutch Shell added between 1.7 percent and 2.2 percent. Miners also found support, with Xstrata, Anglo American, Vedanta Resources, and Antofagasta up between 1.6 percent and 8.3 percent.
Rio Tinto added 1.2 percent, recovering from earlier falls after reports of further shareholder opposition to the firms $19.5 billion deal with Chinese state-owned firm Chinalco and delays in approval by Australian regulators. Property issues bounced back after recent falls, with Land Securities, British Land, and Liberty International gaining between 5.6 percent and 9.4 percent helped by positive news from second line peer Brixton.
Brixton shares leapt 17 percent even after its full-year net asset value fell 47 percent. Citigroup said the company had more value than the current share price implied, but kept a "hold" on the stock. Broker changes also had an influence.
Beverage-can manufacturer Rexam added 10.7 percent after Goldman Sachs and Credit Suisse raised their ratings for the firm, believing the stock had been oversold. However, oil services group Amec shed 1.8 percent after Citigroup cut its rating to "hold" from " buy", following the stocks good run after the company posted its results last Thursday.
Non-life insurers were also weak, retracing recent gains led by Old Mutual, the top FTSE 100 faller, down 3.6 percent, while RSA Insurance, Admiral Group, and Legal & General losing 1.9 to 2.2 percent. The current bleak macroeconomic backdrop was reinforced by property website Rightmove which said asking prices for houses in England and Wales were 9 percent lower than a year ago this month, although this was slightly less than Februarys record 9.1 percent annual drop.
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