Banking and mining stocks rebounded from recent losses as concerns over China’s monetary tightening plans faded and the London market edged higher.
The FTSE 100 Index was up 32.4 points at 5900.4, despite further stress for Asian markets on fears that China’s economy is overheating.
Economists are expecting an interest rate hike in China, as the country battles with stubbornly-high inflation – a move that would choke Chinese demand for commodities.
The speculation saw commodity stocks drop, while ongoing fears over the eurozone debt crisis and a weaker-than-expected show from American banks hit financials. But these concerns eased as investors shrugged off the weak sentiment and were boosted by Thursday’s strong earnings report from US bank Morgan Stanley.
Royal Bank of Scotland soared more than 6% after the Financial Times reported the part-nationalised bank and Treasury officials were examining ways in which the bank could secure an early exit from the government’s asset protection scheme. Shares were up 2.8p at 44.5p.
Morgan’s 80% jump in fourth-quarter profits lifted the sector, with Lloyds up 1.1p at 68p, and Barclays moving 1.2p to 304.5p.
Miners, also boosted by marginally improved metal prices, made gains, with Anglo-Swiss group Xstrata up 23p at 1411.5p, platinum miner Lonmin ahead 27p at 1771p and copper and zinc firm Vedanta Resources advancing 37p to 2409p.
Investors shrugged off official figures from the Office for National Statistics, which revealed retail sales volumes declined 0.8% last month – the worst December on record.
Blue-chip retailers saw gains despite the report, with B&Q owner Kingfisher up 2p at 266.2p, Marks & Spencer ahead 2.7p at 369.6p and Primark owner Associated British Foods adding 5p to 1084p.
Outside the top flight, shares in outsourcer Mouchel jumped 22% or 25.8p to 139.5p after construction firm Costain revealed a third takeover proposal worth more than £170 million.