Britain's top shares closed 0.1 percent higher on Friday, as strength in pharmaceutical and energy stocks offset falls in banks after investors drew confidence from the stimulus statements from the G20 conference. The FTSE 100 ended up 2.93 points at 5082.20, as the index ends the week lower for the first time since the end of August.
Leaders of the G20 pledged to keep emergency economic supports running until a durable recovery was secured. The news saw investors shrug off disappointing durable goods data in the US, as orders tumbled 2.4 percent in August after rising 4.8 percent in July.
The G20 statement saw investors pile back into the US dollar and Mike Lenhoff, chief strategist at Brewin Dolphin, believes that sterling saw weakness against both the dollar and euro may also be helping to keep upward momentum going. "A lot of the biggest FTSE 100 companies are big dollar and euro earners... and I think that has also helped support the upward movement today," Lenhoff said.
Oils were the biggest gainers, as Goldman Sachs predicted higher oil prices as demand recovers. Crude prices regained ground above $66 a barrel after a 4 percent drop in the previous session. BP and Royal Dutch Shell added 0.5 and 0.1 percent each. Goldman Sachs also forecast a decline in production form companies, but expects BG Group, up 1.7 percent, to be the exceptions.
Tullow Oil was the top gainer, rising 3.2 percent, as the broker raised its target price to 1,396 pence from 1,160 pence. Goldman Sachs also upped its target price on Cairn Energy, which climbed 1.5 percent, to 3,116 pence from 2,808 pence. Drugmakers, prime examples of those companies with strong earnings in the US and Europe were also among the top gainers. AstraZeneca and Shire were up 0.2 and 1.6 percent respectively.
GlaxoSmithKline climbed 1.8 percent after European healthcare regulators recommended the company's H1N1 swine flu vaccine for approval. Defensive tobacco firms were also higher with British American Tobacco and Imperial Tobacco rising 0.2 percent each. UK banks extended recent falls as G20 leaders set out the groundwork for new banking rules.
The group said banks must set aside more capital by the end of 2012 and showed agreement on the importance of reforming pay. Lloyds Banking Group came under pressure, falling 3.4 percent as analysts cited the need for possible capital raising.
"There's a lot of noise on rights issues to come... and we're in a logical phase of consolidation after the very material gains since March," said Jonathan Lawlor head of European research at Fox-Pitt, Kelton. Barclays and Standard Chartered fell 2.1 and 1.5 percent respectively, while HSBC gained 0.1 percent after the lender said its CEO would move to Hong Kong as part of a increasing focus on emerging markets.
Oil services firm in Petrofac lost 2.7 percent after broker downgrades by Banc of America-Merrill Lynch and Goldman Sachs on a bearish outlook for the oil support services sector. "To see the market above the 5,100 level is broadly bullish but we need to see it close above that for traders to think about it as being significant," said David Morrison, market strategist at GFT Global.