FTSE rallies despite GDP figures

World markets have staged a bounce back as oil prices steadied and offset disappointing economic data in the UK and US.

London’s FTSE 100 Index rose 81.2 points to 6001.2 – a gain of 1.4% – as it fought back from recent hefty falls seen amid the ongoing political crisis in Libya.

Wall Street’s Dow Jones industrial average was also ahead, despite a downgrading of US GDP growth for the final quarter of 2010 to an annualised rate of 2.8%, from an initial estimate of 3.2%.

In London, investors were similarly undisturbed by revised UK GDP figures, which showed the fourth quarter decline was worse than feared at 0.6%, compared with the 0.5% first estimate. The figures did hit the pound, however, which dropped to a one-month low against the dollar at 1.60.

Trading in the UK was thrown off course earlier in the session on Friday when a major technical glitch halted trading on the London Stock Exchange for more than four hours, but easing oil prices cheered investors and the market pressed ahead after reopening just after noon.

Speculation that the crisis in Libya may have cut oil supplies by less than previously estimated meant the price of Brent crude settled at around 111 US dollars, having spiked at nearly 120 dollars on Thursday.

Saudi Arabia, Opec’s biggest producer, also indicated that it was prepared to increase supplies in the face of the Libya turmoil.

In corporate news, Lloyds, which is 41% owned by the taxpayer, reported pre-tax profits of £2.2 billion – a marked improvement on the £6.3 billion loss in 2009.

But analysts were spooked by comments that the slower UK economy and higher funding costs will prevent growth in margins this year. Shares were 4% lower, a drop of 2.9p to 62.9p.

One of the biggest rises in the FTSE 100 came from BSkyB after the Financial Times said News Corp was close to an agreement with regulators about addressing competition concerns on its bid for the part of Sky it does not already own. BSkyB shares were 4% or 31p higher at 786.5p.