FTSE pulls back losses in US upturn

FTSE pulls back losses in US upturn

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The FTSE 100 Index lifted 62 points to 5642.6

The London market has pulled back losses after strong data from the US offset continued concerns over the eurozone debt crisis.

The positive sentiment from the US saw the FTSE 100 Index lift 62 points to 5642.6, as the banking sector resisted pressure piled on by the ongoing problems in Ireland.

Two different reports revealed Americans earned more and spent more last month and the number of people applying for unemployment benefits dropped last week to a two-year low.

The US Commerce Department revealed consumers boosted their spending by 0.4% in October, while incomes rose 0.5%. The Labor Department said benefit claims dropped by 34,000 to 407,000 in the week ending November 20.

The pound subsequently fell against the strengthened dollar to 1.57, but it was up against the euro at 1.18.

The FTSE 100 Index continued to make progress after the Irish Government unveiled a raft of budget measures to restore the State’s finances by 2014. The government is also negotiating a bail-out package with the EU and IMF, expected to be worth about 85 billion euros (£71 billion).

Royal Bank of Scotland and Lloyds, which both have significant ties to the Irish economy, moved ahead more than 1% and 2% respectively.

Mining stocks recovered from Tuesday’s losses, triggered by an exchange of fire between North and South Korea. Kazakhmys and Xstrata were up 58p to 1449p and 53.5p to 1323p respectively.

Insurers dominated the fallers board following a Morgan Stanley downgrade for Aviva, which slumped 5.3p to 378p, a drop of around 1.5%. Prudential declined 1p to 589.5p and Resolution fell 1.7p to 225.1p.

On a brighter note, shares in catering giant Compass were more than 7% or 38.5p higher at 566p after it smashed expectations with an operating profits rise of 13% to £1 billion. It also announced a 33% jump in its full dividend to 17.5p a share, while Rolls-Royce lost earlier gains after the manufacturing giant announced it will provide long term services support for engines powering 50 aircraft belonging to Emirates.

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