FTSE growth continues

The FTSE 100 Index set another four-month high today as continued economic optimism outweighed concerns over banks.

Financial stocks had a mixed session as investors awaited the outcome of US bank stress testing and as worries continued that some banks may need more capital than previously thought.

The Footsie rose 34.6 points to 4371.5 by lunchtime, reflecting gains in Asia and some European markets as hopes rise that the world economy could be over the worst of the recession.

While the gains come after a 2.5% jump on the Hang Seng overnight and mirror a 0.5% rise on France’s CAC, US markets were predicted to begin the day down.

Speculation about what the results of the US government’s stress tests might reveal tomorrow has intensified after it was reported that regulators have warned Bank of America it will need to raise around $35bn (€26.2bn).

In London, the recently buoyant financial sector once again saw losses.

Barclays was one of the top flight’s biggest fallers, down more than 5%, after cautious assessments from analysts. Shares were down 16.25p to 281p.

Lloyds Banking Group was also slightly in the red, losing 0.8p at 120.3p

However, HSBC climbed the leaders’ board with a 4% rise, up 21p at 538.5p after an analyst upgrade.

Meanwhile, Standard Chartered led the risers, up 85p at 1235p, while Legal & General added 3.5p to 63.5p and Aviva rose 16.75p to 344.25p. The Norwich Union owner improved after it announced a new reattribution offer to one million policyholders in two of its with-profits funds.

British Airways also rose up 6.4p to 172.3p, as confidence returned to the travel sector in the wake of the swine flu outbreak.

Accountancy software company Sage rallied after it detailed better than expected revenues and a 14% rise in pre-tax profits. Shares were 12.9p higher at 198.2p.

As well as a number of commodity stocks, the Footsie fallers board featured the retailer Next – despite better than expected sales figures. Shares fell 54p to 1632p as investors preferred to focus on the company’s cautious comments about trading in the next few months.

In a busy session for corporate updates, shares in pubs chain JD Wetherspoon gained 12.25p to 458.25p – after it said it was slightly more optimistic about prospects in the current financial year.

EasyJet shares were 12.75p lower at 319.5p after the company said it remained on track to make a profit this year, despite a wider half-year loss.