FTSE gains after Portugal bond sale

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The London market rose 36.7 points to close at 6050.7

The FTSE 100 Index has surged ahead as eurozone debt worries eased after a successful bond auction in Portugal.

The London market closed 36.7 points, or 0.6%, ahead to 6050.7 after Portugal managed to borrow 1.25 billion euros (£1 billion) in a bond auction which saw strong demand.

Many economists have sounded fears that Portugal is set to follow in the footsteps of Greece and Ireland and be forced to ask for a bailout from the European Union (EU) and International Monetary Fund (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.

The news also gave confidence to other global stock markets as the Dow Jones industrial average in the United States rose 0.8% while Germany’s Dax and France’s CAC were up 1.8% and 2.1% respectively.

Among UK banks on the advance, HSBC added 26.3p at 715p, Lloyds rose 1.5p at 67.7p while Barclays, which is believed to be heavily exposed to the Iberian peninsula, advanced nearly 4%, or 10.6p, to 302.6p. Sentiment was also boosted by Japan’s pledge to buy bonds aimed at financing Europe’s bailout fund.

Mining companies led the Footsie higher, making up three of the top four risers, lifted by strong metal prices, with Eurasian Natural Resources up 47p at 1125p, Vedanta adding 103p at 2514p and Kazakhmys ahead 59p at 1671p.

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 8.4p lower at 382p while rival Tesco fell 1.7p to 423.7p ahead of its own update on Thursday.

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