The FTSE 100 Index continued its rebound today as positive jobs and manufacturing data from the US ensured a last minute push into the black.
London’s leading shares index closed 24.1 points higher at 5418.7, following another strong session for the banks.
But the upbeat finish was triggered by a better-than-expected US manufacturing report from the Institute for Supply Management.
Elsewhere, sentiment was boosted by a report from the Labor department, which showed US unemployment benefits falling to 409,000 last week.
The pound fell against the US dollar to 1.61 after the strong economic data, but was up against the euro at 1.13, after the single currency was weakend by gloomy German economic data.
The banking sector was buoyed after a report in the Financial Times said Business Secretary Vince Cable, the Cabinet’s most vocal bank critic, had accepted it may be impossible to implement the proposals of the Independent Commission on Banking before 2015.
Royal Bank of Scotland lifted 8%, or 1.98p to 26.3p, while a note from Investec Securities identifying Barclays as a stand-out buy helped its shares improve 9.6p to 180.4p. Lloyds Banking Group was 2.1p stronger at 35.7p.
But the London market was dragged down after data from Markit showed manufacturing across Europe contracted to its lowest level since August 2009, with the powerhouse German economy faring worse than expected, fuelling fears of a double dip recession.
Data from the UK showed that manufacturing activity sank to a 26-month low in August while the volume of new orders declined for the fourth month running.
The declines in London’s blue chip index were echoed across Europe, with the DAX in Germany down nearly 1%.
Financial services firm Hargreaves Lansdown was the biggest riser, up 17%, after it offset recent worries about the impact of regulatory changes on its business by posting a 46% rise in full-year profits to £126m.
It said recent market turmoil created an “exceptional” month for trading activity. The volatility proved good for business as share dealing volumes jumped by 11% and 107% in July and August respectively.
Shares, which have fallen sharply in the last quarter, were 76.5p higher at 508.5p after the firm said it saw no reason why profits should be materially affected by the FSA’s forthcoming retail distribution review.
Recruitment firm Hays also had a good reaction to full-year results, despite posting a sharp drop in profits in the UK. Strong international growth meant profits improved 50% and helped shares lift 5.1p to 80.6p.
Train and bus operator Go-Ahead Group saw its shares dip 5% despite reporting better-than-expected profits after its operations benefited from a surge in passenger numbers.
The group, which has a fleet of 3,800 buses and is part of a joint-venture responsible for Southern, Southeastern and London Midland rail services, said pre-tax profits rose 11% to £97.6m in the 12 months to July 2. Analysts in the City had been expecting a 6% rise. But shares dropped 87p to 1496p following their recent improvement.
The biggest Footsie risers were Hargreaves Lansdown up 76.5p at 508.5p, Royal Bank of Scotland ahead 1.98p at 26.3p, Lloyds Banking Group up 2.1p at 35.7p and Barclays ahead 9.6p at 180.4p.
The biggest Footsie fallers were Fresnillo down 78p at 2022p, BP off 13.95p at 388.5p, ITV down 1.6p at 59.7p and Xstrata off 27p at 1052p.