Miners, banks lift FTSE

Banks and miners pushed Britain's top share index higher on Wednesday, lifted by further proof that the economic recovery in the United States is on track. The FTSE 100 index closed up 42.25 points, or 0.7 percent, at 6000.07, extending Tuesday's 1.6 percent rise. The index has recovered from a sharp dip at the beginning of the week as the focus has shifted from the political troubles in the Middle East to the health of the global economic recovery.
Wednesday's strong reading on the labour market in the United States backed up strong manufacturing data on Tuesday from the world's biggest economy, and gave a steer ahead of Friday's January US jobs report. The data shored up investor appetite for riskier assets such as mining stocks, which had been dented due to fears over the impact of the political unrest in Egypt. ENRC added 3.8 percent after the miner reported a rise in fourth-quarter ferroalloy production.
Banks saw good support on the back of improved investor sentiment, with Standard Chartered up 1.7 percent. There was promising news from the Europe, where Germany and France reached a consensus on steps to boost economic co-ordination within the euro zone as part of a comprehensive anti-crisis package that will also see the scope of Europe's bailout fund bolstered.
"Investors are looking for more proper answers to all the issues that are still there from the financial crisis," said Lothar Mentel, chief investment officer at Octopus Investments. "Once they have been answered, then those doom-mongers will have a less of an argument to cause these short-term stampedes," he said, referring to recent volatility on the FTSE 100.
Chipmaker CSR rose 2.9 percent after its rival Broadcom Corp speculated that Qualcomm Inc, another chipmaker, could buy the British company to bolster its Bluetooth and FM radio range. Imperial Tobacco added 5.9 percent after the cigarette maker surprised investors with a return to volume growth in the last quarter of 2010. "We think this should put a stop to the recent rot in the share price and create a platform for a more balanced ticket of top line delivery in FY11," Investec Securities said in a note. Peer British American Tobacco added 1.4 percent.
On the second tier, Pace, the world's largest maker of set-top boxes, gained 10.6 percent after traders highlighted a newspaper report saying the British firm has won a key contract with an Indian pay-television provider. On the downside, defensives such as International Power, down 3.4 percent, were among the top fallers. National Grid shed 2.1 percent as Investec kept its "sell" rating on the utility, saying Ofgem's seminar on Tuesday only served to highlight the regulatory uncertainty facing the industry. Drugmaker AstraZeneca and TUI Travel fell 2.8 and 1.8 percent, respectively, after going ex-dividend. GKN dropped 4.9 percent after broker Credit Suisse suggested that their profit margins were at risk from rising commodity prices.