London’s blue chip share index steamed 1.4% ahead today thanks to a boost from cheery news on the world’s biggest economy.
Better-than-expected service sector survey data in the US sent stocks surging worldwide, adding to investor optimism after moves by the central bank of Japan to weaken the yen.
The FTSE 100 Index closed 79.8 points higher at 5635.8 – after a late session spurt sparked by hefty gains on America’s Dow Jones Industrial Average.
A trade group report revealed that the powerhouse US services sector saw growth pick-up in September thanks to stronger demand, helping allay recovery fears.
Stocks globally had already been put on the front foot after Japan’s decision to cut its key interest rate even closer to zero and relaunch money boosting efforts.
The UK also had some good news on the service sector after the latest Markit/CIPS study showed higher growth against expectations for a fall.
Better economic news helped the pound rise 0.7% to 1.59 US dollars, although it eased back against the euro after gains yesterday.
In corporate news, there were encouraging figures from supermarket Tesco and Thomson Holidays owner TUI Travel.
Tesco edged up 0.9p to 431.3p after it reported a slight improvement in UK like-for-like sales and said it was benefiting from the “tailwinds of recovery”. Half-year pre-tax profits lifted 12% to £1.6bn.
Most analysts said the update allayed fears about difficult trading conditions, although Evolution Securities said the underlying trends were “not quite so rosy”.
Sainsbury’s, which is due to issue a trading statement on Wednesday, gave back early session gains to stand 0.3p higher at 389.6p.
Thomson parent TUI was one of the session’s top risers after the group said its summer programmes, which run to the end of October, were now almost fully sold following strong booking activity in recent weeks.
TUI shares gained 9.1p to 225.9p – a rise of 4%.
British Airways was flying high after it posted an increase in passenger traffic for the first time since February.
It said 4.3% more passengers travelled with the airline last month. Shares lifted 15.5p to 254.6p.
Satellite communications firm Inmarsat posted the biggest fall in the Footsie after its largest shareholder sold half its 28% stake in the firm.
The move by private equity firm Harbinger appeared to dash hopes that it will table an outright bid for Inmarsat, which dropped 4% or 26p to 629p.
In the FTSE 250, home insurance group Homeserve improved 4%, or 17.1p to 459.1p, after a positive note from broker Credit Suisse.
It said recent transactions had strongly increased Homeserve’s growth potential and earnings visibility.
FTSE 250 haulage firm Stobart Group was also on the right track thanks to news of a three-year “multi-million pound” distribution deal with soft drinks giant Britvic. Stobart shares added 2.9p to 150.3p.
The biggest Footsie risers were British Airways ahead 15.5p to 254.6p, Man Group up 9.5p to 227.1p, TUI Travel up 9.1p to 225.9p and Anglo American ahead 103.5p to 2641.5p.
The biggest Footsie fallers were Inmarsat off 26p to 629p, Burberry down 12p to 1014p, Kingfisher off 2.4p to 230.5p and Cairn Energy down 4.3p to 445p.