The FTSE 100 Index surged 1.4% today as investors were cheered by decent economic news and corporate results from across the Atlantic.
Wall Street’s Dow Jones Industrial Average gained more than 1% early on after strong numbers from the likes of Asda owner Wal-Mart and Home Depot, as well as a bigger than expected leap in industrial production.
This left London’s blue-chips up 74.5 points at 5350.6 as UK inflation – which fell to 3.1% in July – also failed to spring any unpleasant surprises.
The pound saw a weaker day, falling below 1.21 euros and 1.56 against the dollar. Commentators cited relief at successful bond auctions by the Irish and Spanish governments boosting the single currency, while the greenback was helped by the stronger industrial data.
In London insurers again caught the eye with gains of more than 5% for both Aviva and Prudential.
Aviva added 19.4p to 397.3p after Citigroup raised its price target on the stock and investors refused to rule out further developments in RSA’s pursuit of the company’s general insurance business.
Aviva has dismissed the £5bn (€6bn) approach but RSA said it remained open to talks after gathering the support of three major banks for a rights issue.
Buy-out group Resolution fuelled the speculation by revealing it planned further deals to add to the acquisitions of Friends Provident and Axa’s UK life and pensions business.
One scenario being mulled by analysts involves Aviva’s life assurance operation being taken on by Resolution, should RSA be successful in buying the general insurance division.
Resolution announced strong half-year figures from Friends Provident today, with sales up 42% to £458m (€553m) and profits sharply higher at £157m (€189m).
Elsewhere Prudential cheered 28.5p to 583.5p as analysts at ratings agency Standard & Poor’s praised the firm’s strong recent financial performance.
Meanwhile, a rise in commodity prices helped stocks in the mining sector. Lonmin led the way, gaining 88p to 1582p to claim the Footsie’s yellow jersey.
Other notable risers in London included British Airways, which improved 5p to 221.2p after airports operator BAA and the Unite union reached a deal to avoid strike action at major UK airports later this month.
Outside the top flight, shares in building services firm Rok rose 6% – or 1.25p to 20.5p – after it maintained its half-year dividend and said it expected a better performance in the second half of 2010. The optimism came despite recent operational difficulties at its plumbing division, which left the company with half-year losses of £3.8 million.
Rival firm Connaught, which is in the grips of a financial crisis, fell 0.8p to 14.9p amid continued turbulence in the FTSE 250 Index stock.
The biggest Footsie risers were Lonmin up 88p to 1582p, Prudential ahead 28.5p to 583.5p, Aviva up 19.4p to 397.3p and Xstrata up 45.5p to 1059.5p.
The biggest Footsie fallers were BHP Billiton down 46.5p to 1916p, Cairn Energy off 6.8p to 486.4p, International Power down 2p to 362.7p and Diageo, which fell 5p to 1105p.