Britain's top share index hit a one-month closing high on Thursday, extending its advance into a fourth consecutive session, led by commodity stocks on firmer metals and oil prices, and with banks also in demand. The FTSE 100 index closed up 48.45 points, or 0.9 percent, at 5,325.09, its highest close since January 21, after rising 0.6 percent on Wednesday.
The index ended the session above the 5,300 level for the first time since January 22, despite Britain recording a budget deficit last month, the first January deficit on record, after government spending shot up and tax receipts dived.
"The fact that the market is less UK focused is reflected in the fact we've managed a gain despite that very poor net borrowing figure that we saw earlier which was a deficit even though market consensus had been very much for a surplus," said Richard Hunter, head of UK equities at Hargreaves Lansdown. Miners added the most points to the index after copper hit a three-week high on expectations that demand will pick up in China, the world's top industrial metals consumer, in coming weeks.
Eurasian Natural Resources, Kazakhmys and Vedanta Resources were among the best off, putting on 2.4 to 3.1 percent. Energy stocks were also in demand as crude rose above $78 a barrel, with BG Group, BP and Royal Dutch Shell up 0.8 to 2 percent. Banks also rose, still basking in the glow of Barclays' forecast-beating results on Monday.
Barclays rose a further 2 percent. Abu Dhabi raised its stake in the bank to 5.2 percent by paying 1.2 billion pounds to exercise warrants it took as part of the bank's controversial emergency fundraising two years ago. Lloyds Banking Group, HSBC and Standard Chartered added 0.2 to 1.2 percent.
J.P. Morgan added further to its "overweight" stance on European banks, saying "the potential peak in the provisioning cycle, coupled with record steep yield curves in most regions, is a positive for banks' profitability." Defence contractor BAE Systems was the top FTSE 100 riser, up 4.3 percent after its full-year results beat market forecasts, with 2009 profit up 15 percent.
Among other individual movers, Kingfisher rose 2 percent after Europe's biggest do-it-yourself retailer reported its fourth-quarter trading update. Publishing and events group Reed Elsevier, meanwhile, topped the fallers list, dropping 1.5 percent after the company reaffirmed its 2010 outlook. BT Group fell 1.2 percent after credit rating agency Standard & Poor's cut its debt rating for the UK fixed-line telecoms operator by one notch to BBB-minus, traders said.
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