Portugal bond auction aids markets

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The London market rose 19 points to 6033

There were stock market gains on both sides of the Atlantic after a successful bond auction in Portugal helped ease eurozone debt worries.

The Dow Jones Industrial Average rose more than 80 points soon after opening following the news that Portugal managed to borrow 1.25 billion euros (£1 billion) in a bond auction which saw strong demand.

In London, the FTSE 100 Index was similarly reassured by investor confidence in Portugal and edged up 19 points to 6033, or 0.3%.

Many economists have sounded fears that Portugal could follow in the footsteps of Greece and Ireland in asking 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.

The news also lifted markets across Europe, with Germany’s Dax up 1.5% and the CAC 40 in France ahead 1.6%.

Among UK banks on the advance, HSBC added 21.3p at 710p, Lloyds rose 1.15p at 67.3p, while Barclays, which is heavily exposed to the Iberian peninsula, advanced nearly 3% or 5.3p to 297.3p. 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 35p at 1113p, Vedanta adding 92p to 2505p and Kazakhmys ahead 51p at 1663p.

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.

One of the biggest gains in the FTSE 250 Index came from Superdry fashion firm SuperGroup after it said it enjoyed its best ever Christmas trading with a near doubling of retail sales. Shares recovered from a recent wobble to surge 18% or 209p to 1372p.

Shares in Barratt Developments dropped 2% or 1.7p to 93.15p after the housebuilder warned activity was hampered during a difficult December. Last month’s Arctic conditions held back completions as buyers were unable to visit sites, while it said some build projects could not be finished.

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