Britain's top share index jumped 3.4 percent on Friday, shrugging off dire UK economic data as US company results and housing data lifted markets, including boosting commodity prices. The FTSE 100 gained 137.76 points to 4,155.99, its highest close since mid-February after losing 0.3 percent on Thursday.
The UK index is down 6.3 percent this year after sliding more than 31 percent in 2008 but is over 20 percent higher than a low set in March. Investors were in a positive mood, and news that the UK economy's contraction in the first quarter in terms of GDP was its sharpest in 30 years and more dramatically than expected had little impact.
Instead the focus shifted to the United States where better than expected results from companies including American Express and Ford and reassuring data on manufacturing and housing bolstered risk appetite. "First-quarter results in the US generally surprised on the upside and that has fuelled the market gains," said Keith Bowman, equity strategist at Hargreaves Lansdown.
Oil producers added the most points to the index as crude sailed through $51 a barrel. BP, Royal Dutch Shell, BG Group, Cairn Energy and Tullow Oil put on 3.8 to 5.8 percent. Miners were firmer, with Kazakhmys, Vedanta Resources, Anglo American, Antofagasta, Eurasian Natural Resources and Rio Tinto rising between 4.6 and 9.5 percent.
Xstrata was the star performer jumping 14.3 percent with analysts saying it benefited from its higher risk profile. Banks gained, boosted by better than expected results from several US regional banks. Barclays, Lloyds Banking Group and HSBC added 3.6 to 8.6 percent.
A price target hike from UBS also added to gains in Lloyds. UK March retail sales, however, rose 0.3 percent on the month, far better than analysts' forecasts of minus 0.5 percent. Amlin advanced 4.5 percent after Goldman Sachs upgraded the Lloyd's of London insurer to "neutral" from "sell" and removed it from its "conviction sell list".
But Aviva and Legal & General fared even better, gaining 14.2 and 10.8 percent as the volatile stocks benefited from the improved sentiment. BAE Systems strengthened 4.6 percent after UBS added the defence contractor to its "most preferred alpha preference list", saying it offered high visibility of earnings growth, strong cash generation and a very attractive valuation. Drugmaker AstraZeneca rose 5.2 percent after European regulators recommended its drug Iressa for certain lung cancer patients late on Thursday.