FTSE storms ahead

London’s FTSE 100 Index stormed more than 3.4% ahead today despite news that the UK economy had suffered its sharpest contraction in 30 years.

The surge on the market came as US car maker Ford unveiled better-than-expected first quarter results and investors awaited news about US stress tests on 19 of the country’s big financial institutions.

Strong gains among miners also helped the Footsie offset the economic gloom, to close 137.8 points ahead at 4155.9.

But the pound came under pressure after the official GDP data revealed the economy shrank by a worse-than-expected 1.9% in the first quarter, with sterling down almost 1% against the euro.

In the US regulators trying to stabilise the financial system are set to release the test methodology they used, which will give information on the health of the banking sector.

Investors’ sentiment was also boosted by news that the loss at Ford, the second-largest US car maker, was less than feared and the company burned through far less cash during the period than in the fourth quarter.

Financial stocks gained in the market-wide cheer. Royal Bank of Scotland led the sector, up almost 6% – or 1.8p – at 33.3p. Lloyds Banking Group followed with a 4p rise to 100p.

A sector upgrade from broker Cazenove put mining stocks such as Xstrata at the head of the risers board.

Cazenove said the robust Chinese economy should prop up commodity prices, sending the blue chip firm more than 14% ahead, or 75p to 600p.

Eurasian Natural Resources added 52p to 602.5p, while Kazakhmys followed with a gain of 39p to 515.5p.

Insurers joined them as top share risers, as the sector surged ahead of the first quarter results next week from life and pensions giants Friends Provident, Aviva and Standard Life.

Aviva, which is rebranding Norwich Union under the Aviva banner, rose 34p to 273.25p, followed by Legal & General up 4.9p to 50.3p.

Among top tier fallers, British Airways was down 2.4p to 163.9p, after planned Spanish merger partner Iberia issued a profit warning.

Fears were also raised that the earnings alert could throw the merger off course as Iberia is distracted by its trading woes.

The retail sector had a mixed session after strong gains on Thursday following strong half-year results from Debenhams and WH Smith.

Tesco dropped 1.6p to 355.4p, but in the second tier WH Smith and Debenhams rose 23.75p to 438.75p and 6.75p to 84p respectively as more analysts upped their forecasts in the wake of the interims yesterday.

Halfords also cheered 14.5p to 338p, but Sports Direct International shed 1p to 69p.

The biggest Footsie risers were Xstrata up 75p at 600p, Aviva up 34p at 273.25p, Legal & General gained 4.9p at 50.3p and Eurasian Natural Resources up 52p at 602.5p.

The biggest Footsie fallers were Autonomy Corporation down 37p at 1341p, Smith & Nephew down 9.5p at 461.5, Drax Group off 9p at 518p and British Airways down 2.4p at 163.9p.

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