FTSE soars despite US figures

Investors shrugged off gloomy US output figures today as banking shares led a gain of more than 2% for the London market and swine flu fears took a back seat.

Although the first-quarter figures showed the world's largest economy still deep in recession, markets took cheer from signs of recovering consumer spending as well as a sharp fall in industry stockpiles - suggesting recent falls in production could soon come to an end.

Wall Street's Dow Jones Industrial Average gained almost 2% in early trading and cheered sentiment across the Atlantic. The FTSE 100 Index closed 93.2 points higher at 4189.6.

Major banks led the way after part-nationalised Royal Bank of Scotland and Lloyds Banking Group drew positive comments from HSBC brokers.

RBS and Lloyds found favour after analysts said their participation in a taxpayer-backed insurance scheme for toxic debts had increased certainty over their balance sheets.

RBS was the leading blue-chip stock, up more than 12% or 4.1p to 36.8p, closely followed by Lloyds, up 7.9p to 103.5p, after HSBC lifted its target price on the pair.

Barclays, also marked up by HSBC, gained 24.25p to 256.5p, or more than 10%. Asian-facing Standard Chartered cheered 69.5p to 999p.

Investors returned to some stocks set back by swine flu concerns in recent sessions. British Airways added 5.5p to 148.6p and easyJet gained 17p to 319.25p in the FTSE 250, almost 6%.

Back in the top flight, holiday firm TUI Travel also saw a rise, with stocks up 3.5p at 256.75p, after suffering falls in the wake of the outbreak and its moves to cancel trips to Mexico.

But Thomas Cook, which has also suspended travel to the country, saw its shares fall 2.75p to 263p, despite Citi brokers saying the recent weakness was a buying opportunity.

Drugs firm GlaxoSmithKline, which previously advanced on hopes of increased demand for its Relenza product, eased back 9p to 1039p.

Retail shares were also on the back foot, led by Argos owner Home Retail Group. The stock climbed the fallers board, losing 6.25p to 263.75p after full-year profits fell by almost a quarter and it said it expected further margin pressure this year.

Tesco was down 4.9p to 343p after figures yesterday afternoon showed another fall in its market share, down to 30.6% and 0.5% below a year ago.

Royal Dutch Shell shares were 29p higher at 1539p after the oil major reported better-than-expected first quarter results, although the haul of £2.2bn (€2.44bn) was still 58% lower than a year earlier.

Power company National Grid also gained 17p to 562.5p despite losing an appeal over a £41.6m (€46.15m) fine for anti-competitive behaviour imposed by regulator Ofgem last year. The fine was reduced but the firm must still pay £30m (€33.28m).

The biggest Footsie risers were RBS up 4.1p to 36.8p, Barclays ahead 24.25p at 256.25p, Lloyds up 7.9p at 103.5p and WPP up 32.25p at 456.5p.

The biggest Footsie fallers were Liberty International down 31.5p at 394p, Home Retail off 6.25p at 263.75p, Tesco down 4.9p at 343p and Thomas Cook off 2.75p at 263p.

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