FTSE goes on front foot

Positive comments from US Federal Reserve chairman Ben Bernanke put the FTSE 100 Index on the front foot today.

His forecast that the recession should end this year helped the Dow Jones Industrial Average bounce back from a six-year low during the previous session to finish 3% ahead.

With Asian markets also reflecting the gains, the Footsie climbed 50 points to 3866.4 by mid-morning. UK GDP figures also defied gloomy forecasts of a worse economic contraction than first estimated in the last quarter of 2008.

Banking stocks were in focus after Mr Bernanke also said it was unlikely that stress tests of big US banks would lead to full nationalisations.

Lloyds Banking Group was a prominent riser, up 8% or 4.5p to 58.4p, while Royal Bank of Scotland rose 1.4p to 23.5p as investors prepared for the release of annual results tomorrow.

Meanwhile, Cadbury shares were 3% stronger – up 17p at 525.5p – after it posted underlying profits at the top end of expectations. The firm’s “good progress” on margin targets offset disappointment over likely revenues growth at the bottom end of hopes this year.

Property firms also gained ground after JP Morgan analysts upgraded Hammerson, sending the shares 23.75p higher to 334.5p.

Land Securities added 38.5p at 538.5p, while in the FTSE 250 Segro soared 17% or 15p to 102p after renegotiating bank covenants and lessening the chances of having to ask shareholders for cash.

It was closely followed in the second tier by housebuilder Barratt Developments, which jumped 14% or 10.25p to 81.75p despite unveiling pre-tax losses of almost £600 million on land writedowns.

Analysts said the scale of the charges was in line with expectations and focused on the group’s progress in reducing debt. Fellow builders Bellway and Persimmon added 60p to 619p and 25.5p to 319.75p respectively.