Britain's leading shares surged to a six-month closing high on Thursday, led by miners, as UK investors were buoyed by strong earnings in the US and Europe, but TUI Travel fell after reporting accounting errors. Europe's largest travel firm TUI Travel slumped more than 11 percent after it revealed its finance chief would quit and it restated 2009 accounts after stumbling across 117 million pounds ($185 million) in overstated bookings.
The FTSE 100 closed up 28.93 points, or 0.5 percent, at 5,757.86, after rising 0.4 percent on Wednesday, and finishing at its highest level since April 20. The index has risen 10 percent in about seven weeks since the beginning of September. Appetite for risk was in abundance as strong corporate earnings and solid data from China supported confidence the global economic recovery was sustainable.
Miners, supported as metal prices held near recent highs, added most gains to the FTSE, with Anglo American up 2.5 percent after releasing third-quarter earnings. "The giddying effects of the expectation of forthcoming stimulus from the Federal Reserve, as well as good earnings figures are proving to be a heady cocktail for investors," said Michael Hewson, analyst at CMC Markets.
Solid third-quarter results on both sides of the Atlantic lifted confidence that equities would be resilient in the face of economic adversity. Beverage maker Diageo climbed 2.3 percent after French peer Pernod Ricard posted a 10 percent jump in underlying sales in the last quarter, helped by a pick-up in demand in the United States. "It underscores the idea that you can go to defensive stocks for growth. They are on undemanding ratings, and many are growing their dividends," said Andrew Bell, chief executive of investment trust Witan.
British Airways, up 0.9 percent, was buoyed by strength from peers in the United States. Delta Air Lines, US Airways Group Inc and American Airlines parent AMR Corp all posted strong results. Despite TUI Travel's troubles, overall there was confidence in the sector, with InterContinental Hotels up 3.7 percent after French peer Accor raised its 2010 profit goal on Wednesday and posted third-quarter sales slightly above forecasts.
Consumer goods firms Unilever, Reckitt Benckiser and Associated British Foods rose 2.4-3.9 percent, benefiting from strong third-quarter results from French food group Danone. BT Group was up 4.1 percent after a court backed the firm's pension trustees in a dispute with the government over a state guarantee to cover liabilities if it goes bust.
On the downside, GlaxoSmithKline shed 1.3 percent as it said earnings slipped 1 percent in the third quarter, hit by the cost of writing off stocks of its controversial diabetes drug Avandia and increased generic competition for herpes drug Valtrex. It also raised its dividend. Tullow Oil was off 2.1 percent after it said an offshore well in Ghana failed to find oil, prompting Oriel to downgrade the British-based explorer to "reduce" from "hold".