FTSE moves higher

Britains top share index closed 0.7 percent higher on Friday, as gains in commodity stocks and life insurers outweighed heavy falls in volatile banks. The FTSE 100 gained 25.92 points to 3,842.85, having closed up 0.3 percent on Thursday. The index gained 6.3 percent this week, but is still down 13.3 percent this year.
Banks retreated from sharp gains the previous session when they were buoyed by the US Federal Reserves plan to inject $1 trillion into the US economy. Even after Fridays losses the UK banking sector gained 5.8 percent this week after adding 13.7 percent last week, boosted by positive news from Barclays, Royal Bank of Scotland and HSBC. "We are still in a bear market rally, we havent seen any signs that we have seen the economic bottom," said Lars Kreckel, strategist at Exane BNP Paribas.
"The banks have had a fantastic run, so theres a little profit taking but much of the rally so far has been built on financial sector newsflow and the quantitative easing from the Fed." Banks were broadly lower, however, led by Barclays, down 6.7 percent at 105 pence, dented by a Morgan Stanley note, which cut the banks target price to 90 from 145 pence. HSBC, fell 5.7 percent after trading in the banks nil-paid rights issue shares started on Friday.
HSBC investors backed its record 12.9 billion pound rights issue on Thursday, which the bank said would keep it financially strong as it faced "unprecedented turmoil". Standard Chartered and Royal Bank of Scotland fell 1.7 and 0.8 percent respectively, while Lloyds Banking Groups 1.6 percent rise bucked the trend. Highlighting the stiff economic headwinds the UK economy is facing, UK car production in February fell by 59 percent year-on-year, data showed.
British insurer Prudential extended gains from Thursday, up 16.6 percent after it posted forecast-busting results and named financial chief Tidjane Thiam as chief executive to succeed Mark Tucker. Other insurers were also higher. Legal & General, Aviva, Standard Life gained between 8.8 and 13.9 percent while Friends Provident added 2.6 percent. Miners were supported as copper prices hit a 4-1/2 month high. Rio Tinto, Anglo-American and Xstrata rose between 2.5 percent and 5.9 percent.
Oil majors were mostly higher as crude prices held near a four-month high, after Thursdays 7 percent rise on a weaker dollar and doubts over the effectiveness of the Feds plan. Royal Dutch Shell fell 0.4 but BP added 0.2 percent and BG Group climbed 4 percent. Defensive tobacco stocks also gained ground as a slight increase in risk aversion saw investors move back into safer assets. British American Tobacco added 1.5 percent, while Imperial Tobacco climbed 2.3 percent.
On the second line, shares in office rental company Regus rose 25 percent after it reported a 25 percent rise in 2008 pretax profit. Investors will watch data next week to help ascertain whether the resilience in the equity market over the past two weeks can last, with German Ifo business confidence to be released on Wednesday indicator a key focus. "To keep (the bear market rally) going we need a bit of macro-economic backing and one of the potential indicators next week will be the Ifo index," Kreckel at Exane BNP Paribas said.