The London market has shrugged off eurozone debt fears as the FTSE 100 Index pushed to a fresh two-and-a-half year high.
The top flight added 43.3 points to 5934.9, despite a warning from key agency Moody’s that it may lower Portugal’s A1 rating by one or two notches. The warning comes just days after a similar move by the agency on Spain.
Higher metal and oil prices boosted commodity stocks, while banking giants also made decent gains following a poor run sparked by fears of European debt contagion.
Royal Bank of Scotland raced to the top of the risers’ board, up more than 3% or 1.2p to 39.6p, while Barclays added 4p to 265p. Lloyds, which spooked investors on Friday after it highlighted the impact of Ireland’s mounting debt crisis on its books, also made headway, up 0.6p to 67.5p.
Miners dominated the risers’ board, with Vedanta Resources ahead 67p at 2462p, Kazakhmys up 43p at 1621p and Fresnillo adding 44p to 1591.
Rolls-Royce saw shares gain 12p to 649p after the European Aviation Safety Agency said it was set to relax tight inspection rules imposed on its Trent 900 engines. The rules were set last month after a Trent 900 on a Qantas A380 superjumbo blew apart on take-off from Singapore.
But thin trading volumes in the lead up to the Christmas holidays were also thought to be behind the volatility.
The surge came despite news of more woes in the retail sector after small cap stock Alexon, the owner of Ann Harvey, Dash and Kaliko brands, issued a profits warning following snow-hit sales. Alexon’s shares plummeted 17% or 2.5p to 12.5p after it reported a 20% plunge in sales over the past few weeks.
The figures confirmed the nightmare experienced by retailers across the country as snow and ice keeps shoppers away from stores in what should be the busiest week of the year. Blue-chip retailers followed suit, with Marks & Spencer down 1.6p at 371.3p and Next off 14p at 1954p. But supermarkets pulled back from Monday’s declines, with Tesco ahead 1.5p at 431.5p, Sainsbury’s advancing 1.1p at 374.3p and Morrisons up 1.3p at 265.9p.
BT saw shares drop more than 1% after the communications watchdog issued a “statement of objections”, setting out its view that BT has infringed competition law in relation to the pricing of its wholesale calls product between July 2008 to April 2009. BT refuted the claim and said it would co-operate with Ofcom’s investigation. Shares fell 2.1p to 185p.