The FTSE 100 Index powered 1.7% ahead for a second day of strong gains after a dramatic U-turn on relief over Citigroup’s first quarter figures.
London’s blue chips extended the 2.5% rally seen yesterday after a turbulent week, which had seen the Footsie plunge to three-year lows before recovering over the past two days.
Better-than-expected results from Wall Street banking giant Citigroup helped continue the bounce back from banking shares, which drove the FTSE 100 90.1 points higher to close at 5376.4.
Citi posted a 2.5 billion US dollar (£1.25bn) second quarter loss, well ahead of the three billion dollar deficit feared by analysts.
It prompted a reversal of more than 130 points, with the FTSE 100 having been mired in negative territory during mid-morning trading.
US-facing building supplies firm Wolseley led the charge amid hopes the credit write-down corner may have been turned. The group’s shares closed up more than 14%, or 41.25p to 327p.
Barclays followed on the risers board, confirming it had raised £4.5 billion of new capital through a share issue. Wealthy overseas investors such as sovereign wealth funds are providing most of the funds after just 19% of existing shareholders took part in the share issue.
Shares were initially flat after the news, but jumped 10%, or 29.75p to 320.25p, amid the Citi-inspired rally.
Lloyds TSB was next, adding 30.5p to 331p, with Royal Bank of Scotland also enjoying a second day rebound, ahead 10%, rising 18.1p to 197.6p, outstripping the 9% gain seen during yesterday’s session.
The prospects for HBOS’s 275p a share rights issue looked bleak despite the shares climbing 13.75p to 282p. Shares were down for much of the morning and were below the offer 275p price at the 11am deadline for acceptances.
In the FTSE 250, housebuilders were starring with some impressive double-digit percentage gains.
Taylor Wimpey was up 12%, or 5p to 45.25p, consolidating a strong session seen yesterday. Charles Church owner Persimmon also added more than 15%, or 44.5p to 336.5p.
Miners remained on the back foot thanks to falling commodity prices, with Eurasian Natural Resources down 6%, or 64p to 1036p, while Lonmin was also down heavily, losing 104p to 2410p.
Oil trading at around 130 US dollars a barrel, more than 11% down on last week’s 147 dollar high, also depressed energy-related firms. Royal Dutch Shell fell 4p to 1795p, with prospector Tullow Oil 10p cheaper at 783.5p.
But British Airways was among the index’s biggest risers, up nearly 7%, or 14.75p, to 242p. Cruise ship giant Carnival also added 136p to 1745p.
Supermarket giant Tesco was under pressure despite better news on the sales front for high street bellwether John Lewis. The department store chain revealed a 5.9% jump in revenues for the week to last Saturday, but Tesco fell 13p to 375.8p after two European contemporaries issued profit warnings.
The biggest Footsie risers were Wolseley ahead 41.25p at 327p, Barclays up 29.75p at 320.25p, Lloyds TSB ahead 30.5p at 331p and RBS up 18.1p at 197.6p.
The biggest Footsie fallers were Ferrexpo down 24.25p at 270p, ERN off 64p at 1036p, Lonmin down 104p at 2410p and Petrofac down 25p at 619p.