Britain's top share index hit a 22-month closing high Wednesday, as solid results from J.P. Morgan and Intel and strong US retail sales lifted hopes that a recovery in the world's biggest economy is gaining momentum. The FTSE 100 closed up 34.59 points, or 0.6 percent, at 5,796.25 - its highest close since June 17 2008, after it fell 15.99 points, or 0.3 percent, on Tuesday.
The UK blue chip index has gained more than 7 percent this year, building on a 22 percent rise in 2009. Miners were in demand against a backdrop of firmer metals prices, and as investor appetite for risk improved, with Eurasian Natural Resources, Fresnillo and Xstrata the best off, up 2.4 to 4 percent.
"The concerns over Greece seem to be contained and the earnings season has got off to a good start despite obviously Alcoa not doing too well," said Angus Campbell, head of sales at Capital Spreads. Disappointing quarterly results from Alcoa, which kicked off the US earnings reporting season on Monday, were eclipsed as US bank J.P. Morgan Chase on Wednesday reported a jump in first-quarter earnings, with investment banking revenues more than offsetting losses on consumer loans.
And Intel's sales and margin forecasts far outpaced market expectations when they were released after the Wall Street close on Tuesday. "If technology is surging ahead then of course that's generally on the whole a good indication that the overall economy is in good shape," Campbell said.
Optimism about the economy had a positive knock-on effect on crude oil prices, which helped BP and Royal Dutch Shell put on 0.4 and 1.5 percent respectively. The J.P. Morgan results boosted UK banks. Barclays, Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group were up 0.8-2.9 percent.
Adding to optimism about the pace of economic recovery, sales at US retailers rose more strongly than expected in March. UK chip company Arm Holdings gained 1.4 percent in the wake of the Intel results, while software firm Autonomy added 1.3 percent.
Telecoms carrier BT Group was the top blue chip gainer, up 4.4 percent, seeing demand after Morgan Stanley said the firm looks substantially cheaper than its US peers such as AT&T. Stocks perceived as defensive were shunned by investors, with cigarette firm British American Tobacco off 1.2 percent, drugmaker AstraZeneca 1 percent weaker, and consumer goods group Reckitt Benckiser down 1.2 percent.
A broker downgrade put pressure on Associated British Foods , off 1.8 percent, with Deutsche Bank cutting its rating to "sell" from "hold", citing valuation concerns over Primark, its clothing retailer. Ex-dividend factors knocked 1.91 points off the FTSE 100 index on Wednesday, with BG Group, Capita, Legal & General and Tullow Oil all losing their payout attractions.