Gains in banks and miners prompted by recovering risk appetite on Thursday outweighed weakness in oils, retailers and utilities, to leave Britains FTSE 100 closing 0.6 percent higher. Britains blue chip index closed 24.95 points higher at 3,925.20, having lost 11.21 points, or 0.3 percent on Wednesday.
The index is down 11.5 percent this year but remains over 13 percent higher than this years trough. Stocks rallied towards the end of the day as strong results from US retailer Best Buy lifted stocks on Wall Street and lifted broader investor sentiment. US Treasury Secretary Timothy Geithner outlined new "rules of the game" in an effort to make the system tightly regulated enough that it cannot again pose a widespread threat to the economy, also settling nerves.
"Weve had one or two corporate developments in the US, which has aided sentiment, and weve had a speech from Geithner that has provided a bit of reassurance," said Keith Bowman, equity analyst at Hargreaves Lansdown. Banks added most points to the index.
HSBC, Lloyds Banking Group, Barclays, and Royal Bank of Scotland were up between 6.7 and 13.5 percent but Standard Chartered fell 1.4 percent after being downgraded by Deutsche Bank. Strength in heavyweight miners also bolstered the FTSE 100 index, with firmer metal prices providing support along with hopes of firmer demand. Kazakhmys, BHP Billiton and Xstrata gained between 0.7 and 9.3 percent.
Rio Tinto added 7.4 percent after it said it could sell more assets and reschedule debt if a proposed $19.5 billion tie-up with Chinas state-owned aluminium firm Chinalco fails to materialise. British retail sales fell 1.9 percent in February, nearly five times the 0.4 percent fall expected by analysts, taking the annual rate of growth to just 0.4 percent, well below forecasts for 2.5 percent.
Retailers, one of the better performers among the FTSE 350 sub sectors this year, took a tumble as the data added to disappointing outlooks from two blue chip stores groups. Kingfisher shed 2.3 percent after it accompanied its full-year results with a gloomy outlook, with the DIY retailer seeing a tough year ahead.
Next lost 1.6 percent as the fashion retailer said it expects its sales to keep falling as its full-year profits fell 13.9 percent. Utilities were the main drag on the index after disappointing news in the sector, and some negative broker comment. United Utilities shed 2.7 percent with investors unimpressed by its trading update which sees the multi-utility meeting full-year expectations.
International Power fell 2.5 percent as Goldman Sachs cut its rating to "sell" in a review of the sector. Weakness in the heavyweight energy sector also weighed, with BG Group down 1.9 percent and Royal Dutch Shell down 0.6 percent. The FTSE 100 is seen gaining 15 percent from its current level, marking just a 1 percent gain on the year despite losing nearly a third of its value in 2008, a Reuters poll showed.