Britain's top share index rose 1.3 percent on Friday to hit its highest closing level in seven weeks, led by banks after quarterly earnings from Citigroup were not considered as bad as many had expected. The FTSE 100 closed up 76.1 points at 6,056.5, underperforming against Germany's DAX and France's CAC-40 because of weakness in heavyweight mining stocks.
The UK benchmark index gained 2.7 percent this week and is on track for its best monthly performance in five years. "Better than expected results from the US just help the market to rally," a trader said. "It's not as bad as people had feared."
Banks added nearly 27 points to the blue chip index after analysts and investors expressed optimism that Citigroup was taking necessary steps to move past credit problems and drive down costs. Citigroup, the largest US bank, posted its second straight quarterly loss, hurt by more than $16 billion of writedowns and costs related to credit losses, and said it would cut another 9,000 jobs.
US manufacturers Honeywell International and Caterpillar also reported stronger-than-forecast earnings, brightening the view of the global economy. In the UK, Barclays, HBOS, Lloyds TSB, HSBC, Alliance & Leicester and Standard Chartered were up between 1.5 and 4.5 percent.
Royal Bank of Scotland advanced 4.9 percent. An industry source said the lender was set to announce a rights issue next week. "There is plenty of technical resistance on the FTSE 100 at around the 6,000 level and upwards for about 200 points or so and some heavy lifting will be needed to get through this threshold," Mike Lenhoff, chief strategist at Brewin Dolphin, said in a note.
"If sentiment for the financials was to change for the better this would certainly help and, interestingly, the sector has been ignoring a lot of the bad news," he said. "This doesn't mean the market is set to take off but it could mean that we have seen the downside."
Also in the financial sector, Prudential and Aviva both climbed 4.1 percent. Kazakhmys and ENRC shed 6.4 and 4.5 percent respectively after Kazakhstan said it may impose a customs duty on exporters of metals and would decide on its size by the end of April. Weaker metal prices also weighed on the mining sector, with BHP Billiton, Rio Tinto, Angld 1.8 percent. Oil shares tracked higher crude prices. BP added 1.1 percent, Royal Dutch Shell gained 0.6 percent and gas producer BG Group put on 0.5 percent.
Index heavyweight Vodafone was up 2.8 percent after losing nearly 2 percent in the previous session. Kingfisher, Home Retail and Next bounced 3.8 to 5.2 percent after the retail sector fell sharply on Thursday after a profit warning from shopping catalogue and educational supplier Findel.
Marks & Spencer put on 3.3 percent. The company and Reliance Retail announced a joint venture in India. Drugmaker Shire tacked on 3.3 percent as traders cited persistent talk of a possible bid for the British firm. Speculation swirled last month that Pfizer or AstraZeneca could launch a bid for Shire.
InterContinental Hotels advanced 3.6 percent after the world's largest hotelier said it planned to double its number of hotels in China to more than 200 by the end of 2010 as rising wealth boosts tourism in the world's fastest-growing major economy.
Among mid-caps, directories business Yell Group jumped more than 13 percent, boosted by Internet leader Google Inc's better than expected quarterly profit, which waved off fears of an online advertising slump, traders said.