Heavyweights stage FTSE rally

A rally among heavyweight commodity stocks provided some welcome respite for the London market today as the FTSE 100 Index soared more than 2% higher.

Mining firms led the advance as investors piled in to the sector following a recent sell-off.

The Footsie was 109 points up at 4932.5 after a positive session for Asian markets overnight.

America’s Dow Jones Industrial Average was expected to resume trading in positive territory after being closed yesterday for the long holiday weekend.

Bargain hunting also saw similar strong performances for indices across Europe, with the Cac 40 in France up 3% and the Dax in Germany ahead more than 2%.

The Footsie risers board was led by Kazakhmys, which cheered 65.5p to 1033p, while BP enjoyed its second positive session in a row with a gain of 10p to 344.3p – a 3% rise.

This followed Royal Bank of Scotland’s decision to upgrade the stock from hold to buy and after the oil company insisted it would be able to meet the cost of the Gulf of Mexico oil spill without issuing new shares.

The positive session extended to banking stocks, with Barclays up 15.5p at 274.7p and Lloyds Banking Group ahead 1.7p at 56.5p.

Housebuilders were in positive territory in the FTSE 250 Index after Persimmon reported a 25% rise in half-year turnover and said sales had returned to more normal levels since George Osborne’s austerity Budget.

Charles Church owner Persimmon jumped 6% or 21.6p to 370.1p, while Barratt Developments was 4.6p higher at 98.5p.

Online gambling group PartyGaming was also enjoying a sharp rise thanks to news that revenues have not been impacted by the football World Cup.

Sales grew 6% in the first quarter of 2010 – helping shares rise 8%, or 18.5p to 239.3p.

But fellow FTSE 250 stock N Brown, the home shopping firm, was 5% lower with a 12p fall to 242.9p after it said like-for-like sales growth had slowed to 0.1% as consumer caution hit spending.

Elsewhere, educational software supplier RM was 3% lower after revealing that the Government’s decision to axe its school rebuilding scheme would put £200m (€241m) of projects at risk.

However, the shares blow eased back from an initial double digit drop as analysts said the impact was unlikely to affect RM’s long-term future.

Shares were later down 5.5p to 156.5p.

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