Britain's top share index rose for the third consecutive day on Wednesday, led by financials and miners on bullish corporate results and economic data, and adding to growing optimism over the health of the global economy. The FTSE 100 ended up 32.58 points, or 0.6 percent at 5,276.64, touching a two-week high during the session after it added 1.5 percent on Tuesday.
Man Group topped the winners' list, rising 5.2 percent on market talk that BlackRock was interested in taking a stake in the firm, and investors reacted positively to weekly results of its AHL Diversified fund. However, a source at BlackRock said the firm had no interest in buying the hedge fund manager.
Banks have been rocked in recent weeks over fears that Greece's debt problems could spread throughout the eurozone and negatively impact banks exposed to the region. Strong results from Barclays on Tuesday and French lender BNP Paribas, which beat forecasts with fourth-quarter results on Wednesday, indicated the financial sector might be in better shape than many had feared.
Barclays, HSBC, Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group added 1.9-3.2 percent. "The risk trade is still on, with woes over sovereign debt and China tightening seemingly swept under the carpet," said Angus Campbell, head of sales at Capital Spreads.
"Investor are focusing on corporate earnings which have been better than expectations and it is earnings which drive equity markets." The UK's fifth-largest life insurer Legal & General rose 2.7 percent after meeting expectations with fourth-quarter new business sales.
The sector, which has been the subject of consolidation speculation for months, was a big winner. Aviva, Prudential and Resolution climbed 0.7-3.3 percent. Data showing that the world's biggest economy was in burgeoning health added to the optimism. US industrial output rose by a bigger-than-expected 0.9 percent in January, while housing starts rose 2.8 percent to their highest level in six months in January.
There was also strong results from farm equipment maker Deere & Co, which followed bullish numbers from drugmaker Merck and upbeat regional manufacturing data on Tuesday. The economic data underpinned gains in metal prices as the outlook for demand brightened, which boosted miners as fears over the impact of China monetary tightening continued to fade.
Eurasian Natural Resources, Rio Tinto, Xstrata, Lonmin, Kazakhmys and BHP Billiton added 0.2-4.1 percent. Retailers were also in demand, with Home Retail up 2.9 percent after Investec upgraded its recommendation on Britain's biggest household goods retailer to "buy" from "hold" on valuation grounds, and raised its earnings forecasts.
Peer Kingfisher gained 3.3 percent ahead of its fourth-quarter trading update due on Thursday. Aerospace group Cobham rose 2.7 percent, bolstered by news it has won a contract to make components for new helicopters to be used by the US army.
Among a small list of fallers, Rexam dropped 1.8 percent with traders saying its full-year pretax profit was disappointing, although the company forecast improved profit for 2010. BP and Scottish & Southern Energy fell after trading ex-dividend.
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