Banks and mining stocks drove a much-needed rally for the London market after strong data from China and the United States boosted sentiment.
The FTSE 100 Index, which slipped to its lowest level in two months on Tuesday, gained 2% or 114.2 points to 5642.5 by close on Wednesday amid a Europe-wide rally.
Spirits were also brighter on Wall Street, with the Dow Jones Industrial Average 1.7% higher by the time of London’s close, after figures showed US manufacturing orders increased in November and private businesses added 93,000 jobs in November, against expectations for a 70,000 gain.
The report followed better-than-expected manufacturing figures from China, which showed the country’s resource-hungry boom picked up pace in November.
The euro has taken a battering, sinking below 1.30 dollars to its lowest level in 11 weeks, but was up against all major currencies in trading. The pound was flat against the dollar at around 1.55.
Mining and banking stocks recovered losses in recent days and filled the risers board, with Royal Bank of Scotland up more than 6% or 2.3p at 39.9p, while Lloyds was not far behind, lifting more than 6% or 3.6p to 64p.
China’s strong growth figures proved good timing for Prudential bosses as they met investors in London to outline their plans for Asia, including a target to double the value of last year’s operating profits by 2013.
Prudential shares jumped on the forecast, up nearly 5% or 31p to 599p, as chief executive Tidjane Thiam said the company aspired to be “one of the winners in the post-financial crisis world”. Other risers included accountancy software firm Sage after it reported a bigger than expected 14% rise in annual profits and a return to sales growth over the second half of the year.
In other results, Thomas Cook dropped 4%, off 8.3p to 178p, in the wake of a 6% fall in full-year profits as growth in central Europe and Germany only partly offset a weaker performance in the company’s UK business.
The biggest FTSE 100 Index risers were Royal Bank of Scotland up 2.3p at 39.9p, Lloyds Banking Group ahead 3.6p at 64p, Xstrata up 75p at 1367p and Prudential ahead 31p at 599p while the biggest fallers were National Grid down 15.5p at 552.5p, Severn Trent off 36p at 1410p, United Utilities down 7p at 589.5p and Capita off 6.5p at 645.5p.
