Banking stocks boost FTSE 100 Index

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The London market was 22 points ahead at 6036

A successful bond auction in Portugal has helped ease eurozone debt worries and seen banking stocks push the FTSE 100 Index higher.

The London market was 22 points ahead at 6036 after Portugal managed to borrow 1.25 billion euros (£1 billion) in a bond auction which saw strong demand.

Many economists fear Portugal is set to follow in the footsteps of Greece and Ireland and be forced to ask for a bailout from the EU and IMF.

But the auction – viewed as encouraging by analysts and seen as a key test of investors’ confidence in Portugal – lifted sentiment and saw some of Britain’s biggest banks make gains.

HSBC was up 21p at 709.7p, Lloyds was ahead 0.6p at 66.8p, while Barclays, which is heavily exposed to the Iberian peninsula, advanced more than 2% or 6.3p to 298.3p.

Sentiment was also boosted by Japan’s pledge to buy bonds aimed at financing Europe’s bailout fund.

Mining stocks had a decent session, lifted by rising metal prices, with Eurasian Natural Resources up 34p at 1112p, Vedanta adding 68p to 2479p and Kazakhmys ahead 45p at 1657p.

The market also reacted to a positive start to the US earnings season with the first rise for US shares in four sessions on Tuesday following a forecast-beating results performance from aluminium producer Alcoa.

The retail sector was once again in focus after Sainsbury’s reported better-than-expected like-for-like sales growth of 3.6% in the 14 weeks to January 8.

The update fuelled speculation that Sainsbury’s has overtaken Asda as the UK’s second largest supermarket, but broker Seymour Pierce kept its sell rating on the stock and said shares had a premium valuation. The stock was 9.9p lower at 380.5p, while rival Tesco fell 4.8p to 420.5p ahead of its own update on Thursday.

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