Britain's FTSE 100 share index gained 0.7 percent on Tuesday, boosted by heavyweight oils and pharmas as a fairly broad-based pre-Christmas rally moved into its second session. At the close the index was up 34.67 points at 5,328.66, but still over 50 points below its 14-month closing high of 5,382.67 hit on November 16. The blue chip index ended 1.9 percent higher on Monday, its biggest one-day percentage gain since December 1.
"As liquidity drains ahead of Christmas, stocks are just getting squeezed higher as most of the potential bad news moves out of the way and investors can focus on the festive season," said Mic Mills, senior trader at ETX Capital. Energy shares were the top blue chip performers although crude prices slipped back below $74 a barrel after Opec, as expected, agreed to roll over its production targets following a meeting in Luanda, Angola. Royal Dutch Shell, BP and Tullow Oil added 0.2 to 1.9 percent. Cairn Energy was the top FTSE 100 riser, up 6.3 percent after the company's 10-for-1 share split took effect.
Cairn's shares closed at their highest level since June 2008 on Monday after the explorer said it had secured a rig to allow it to commence a drilling programme offshore western Greenland. Defensive issues, traditionally laggards in a bull market, were also pushed higher as the pre-Christmas rally took hold.
Pharmaceutical firms AstraZeneca and GlaxoSmithKline rose 1.8 percent and 1.9 percent respectively, while British American Tobacco and Imperial Tobacco gained 0.9 and 1.8 percent. Mobile telecoms heavyweight Vodafone added 0.6 percent following an upbeat interview with the firm's head of UK business, Guy Laurence in the Financial Times.
The final reading for British third-quarter GDP was revised to -0.2 percent, up from the -0.3 percent seen at the first revision but less than expected. The year-on-year figure was unchanged at -5.1 percent. Meanwhile, US final third-quarter GDP was revised down to +2.2 percent from +2.8 percent previously.
However, US blue chips were 0.5 percent higher by London's close as investors focused on a much stronger than expected rise in US existing home sales in November, up 7.4 percent against expectations for a 2.9 percent rise. British banks ended mixed with Standard Chartered, HSBC, and Lloyds Banking Group adding between 0.1 and 0.3 percent.
But Royal Bank of Scotland and Barclays shed 3.0 and 0.2 percent respectively. Miners were weak as copper prices fell, weighed down by a weaker dollar. Kazakhmys, Xstrata, Vedanta Resources, BHP Billiton and silver miner Fresnillo shed 0.1 to 3.7 percent.
British Airways lost 2 percent as the winter storms in Europe continued to cause travel chaos, and following a US ruling on its link-up with American Airlines. American Airlines and British Airways should agree to concessions to secure approval of a bid to deepen their transatlantic alliance, the US Justice Department said on Monday.
Travel groups Thomas Cook and TUI Travel were also hit by concerns over the travel problems experienced in the UK and Europe after heavier than usual snowfalls, falling 0.7 and 0.2 percent respectively. Among the mid-caps, housebuilders were good performers, led by Taylor Wimpey and Barratt Developments, which gained 4 and 1.7 percent respectively after Goldman Sachs upgraded both to "buy" on valuation grounds in a sector review.
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