The London market gained more than 1% today as investors hailed the end of recession in the United States.
The better-than-expected performance by the world’s biggest economy – it expanded by 3.5% in the third quarter on an annualised basis – helped the FTSE 100 Index claw back some of the 2% fall seen on Wednesday.
The blue-chip index was in the red before the lunchtime figures, but rallied strongly in the afternoon to finish 57.3 points ahead at 5137.7.
Wall Street’s Dow Jones Industrial Average also reacted positively to the better economic news, adding almost 2% in early trading.
Tim Hughes, head of sales trading at IG Index, said: “A run back to the highs around 5300 still looks achievable for the FTSE in the next couple of weeks.”
Miners benefited from the improved sentiment as shares in Kazakhmys lifted 73p to 1186p, Xstrata added 65p to 947p and Anglo American rose 122p to 2300p.
Shares in part-nationalised Royal Bank of Scotland and Lloyds Banking Group led the way – up 3.8p to 43.8p and 6p to 8p respectively – after Lloyds began sounding out investors about a reported £25bn (€27.8bn) fundraising.
Lloyds also soothed market nerves after saying restructuring plans being thrashed out with European regulators were unlikely to have a “material impact” on the group.
This came as a relief to investors in both banks after this week’s break-up of Dutch bank ING raised fears about large scale sell-offs.
Royal Dutch Shell was the biggest faller after its third quarter results received a lukewarm response.
The profits haul was slightly ahead of expectations, but this failed to make an impression on the City after rival BP smashed forecasts on Tuesday. Shell shares were down 56.5p at 1813p, a drop of 3%.
BG Group also dropped 3p to 1092p, but BP clung to recent gains as shares rose 2.1p to 586.5p.
Among other companies reporting results today, AstraZeneca slipped 1% despite reporting a 22% rise in third quarter profits and raising its full-year earnings guidance for the second quarter in a row. Shares were off 37p to 2752p.
In the FTSE 250 Index, National Express fell 12% or 43.6p to 321p as it snubbed a takeover move by Stagecoach and said it would press ahead with its own fundraising plans.
Directories firm Yell, which is also battling to secure its long-term financial position, recovered from the weak start seen after it was forced to give lenders an additional day to approve a restructuring plan. Shares later recovered to stand 2.8p higher at 49.2p.
The biggest gain in the FTSE 250 Index came from defence services firm Qinetiq, which climbed almost 16% or 22.5p to 165.4p after appointing former De La Rue boss Leo Quinn as its new chief executive.
The biggest Footsie risers were RBS up 3.8p at 43.4p, Lloyds ahead 6p at 86p, Xstrata up 65p at 947p and Fresnillo up 50p at 802p.
The biggest Footsie fallers were Shell down 56.5p at 1813p, AstraZeneca off 37p at 2752p, BAE Systems down 3.9p at 315.2p and British American Tobacco down 18p at 1939p.