FTSE bounces into second half with banks, oil supportive

Britain's major share index made a positive start to the second half on Monday, bolstered by strong gains among financials, miners and energy companies as oil prices firmed. The FTSE 100 ended the day 0.9 percent higher at 7,377.09 points, recovering from losses last week, and was more or less in line with the broader European market which gained 1.1 percent on the day.
Oil companies, which have been the worst-performing sector this year, were lifted by higher crude prices after the first fall in US drilling activity in months alleviated some concerns over a supply glut.
Oil majors BP and Royal Dutch Shell were up 1.9 percent and 1.8 percent respectively. "Having led everyone down for most of the second quarter, crude prices are trending up slightly," said Ian Williams, economics and strategy analyst at Peel Hunt. HSBC, Lloyds and Barclays were among top gainers after several central bankers suggested last week that monetary policy could soon start to tighten.
"Given the trend in sentiment over the rate outlook, the financials having been calm before that, you would expect them to be moving back to the top of the list again," said Williams. Glencore, whose trading arm also benefits from higher crude prices, jumped 5 percent to lead gains among miners, which were also supported by better than expected factory activity data from China.
Provident Financial, whose profit warning sent its shares plummeting 18 percent on June 21, was among the top fallers after Liberum analysts said another profit warning for the Home Credit division was likely. "Guidance remains too optimistic, in our view," they said. Mid caps, however, slipped 0.1 percent with Inmarsat among the biggest fallers. The satellite company dropped 4.7 percent following a report that it faced a court challenge from rivals over its in-flight Wifi service.
Among gainers, Electrocomponents drew buying after its first-quarter results impressed with 13 percent growth in revenues. Its shares climbed 3.8 percent, taking its year-to-date gains to around 21 percent. Investors were also readying for second-quarter earnings updates from UK corporates to start streaming in. "The next few weeks will be quite telling. There's still a little bit of upside potential in the overseas earners, and the domestics especially will be interesting to watch given the pressures on the UK consumer," said Williams.