Retail bounce boosts FTSE

Strong gains in the retail sector helped London’s blue-chip share index return to positive territory during a buoyant final session of the week today.

Yesterday’s better-than-expected employment data in the US reduced fears of a double dip recession and gave general investor sentiment a boost.

The FTSE 100 Index rose 55.1 points to 5595.2, while futures trading suggested the Dow Jones Industrial Average on Wall Street was also set to rally.

Forecast-beating results from US giants Oracle and Blackberry maker Research in Motion added to the cheer seen after news on Thursday of a drop in the US jobless claims.

Asian markets were also on the front foot, with the Nikkei and Hang Seng closing up by more than 1%.

In London, the top flight hit a four-month high at the start of the week before finding itself stuck in a narrow trading range as investors struggled to call the next move for world markets.

Gains were seen across the board today, with retailers surging after falls yesterday on the back of a shock decline in official retail sales data.

A broker upgrade for supermarket Sainsbury’s – up 11.1p to 389.9p, or 3% - sparked advances across the entire sector.

UBS said it believed Sainsbury’s would deliver earnings growth and more than double the dividend over the next 10 years in what it predicted would be a “transformational decade”. The update helped rival Tesco lift 6.5p to 433.4p and Morrisons add 4.8p to 302.3p.

The biggest gain in the top flight came from engineering group Invensys after it signed a deal to supply products to Chinese train rolling stock manufacturer CSR.

Analysts at Singer described the contract as significant as shares in the group surged 5% or 14.8p to 291.7p.

Commodity stocks were also among the major beneficiaries of the improved sentiment as Kazakhmys lifted 38p to 1403p and Antofagasta cheered 25p to 1180p.

In the second tier, Robert Wiseman Dairies fell another 2%, down 7.5p to 342.5p following a 30% plunge yesterday after it indicated that a milk price war was likely to hit profits.

But pub group Mitchells & Butlers was on the rise after it announced a deal to buy 22 Ha Ha Bar & Grill sites, which it will convert to existing brands such as All Bar One and Browns.

Shares in M&B responded with a 4p gain to 298.5p.

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