Banks and mining stocks lead recovery on world markets

World markets today recouped some of the losses they suffered in yesterday’s rout, with banks and mining stocks leading the recovery.

Renewed fears over the eurozone debt crisis, particularly Spain’s ability to carry out its austerity programme, added to concerns about the strength of the US economic recovery as the UK’s top flight slumped 2% yesterday.

The mood remained uncertain today but the Dow Jones Industrial Average in the US was up 0.7% in early trading following its worst run since August last year.

It was boosted by better-than-expected first-quarter results from aluminium maker Alcoa last night and by bargain hunters returning to the market.

In London, the FTSE 100 Index was up 36.3 points at 5632.4, while the Dax in Germany and the Cac-40 in France were up more than 1%.

Bond yields were slightly lower in Spain and Italy today following worrying rises yesterday but traders said this week’s events underlined nerves over the economies of southern Europe.

London’s banks recovered some of their losses as Barclays added 4% or 7.6p at 213.8p and Lloyds recouped 3% or 1p at 30.8p. Royal Bank of Scotland lagged behind but was still 0.5p higher at 25.2p.

Heavily-weighted mining stocks also offered support with Fresnillo and Kazakhmys up by 63.5p at 1579.5p and 22p at 875p respectively.

Security group G4S was another big riser, adding 2.5% or 6.9p to 280p, after Morgan Stanley upgraded its rating from equalweight to overweight.

A broker note also had an impact on BT Group but the telecoms firm moved in the wrong direction after JPMorgan Cazenove suggested investors take stock following a recent strong run for the blue-chip company. Shares were 2.5% or 5.5p lower at 213.1p.

Outside the top flight, recruitment firm Michael Page International fell 3% after its first quarter performance revealed weak demand for banking posts, particularly in the UK and North America.

The group, which saw shares drop 15.5p at 438.4p, was downgraded to hold from buy by Investec after it reported a dip in UK profits, which make up 23% of total group earnings.

Out-of-town homewares retailer Dunelm held firm after it said like-for-like sales grew 0.6% in the 13 weeks to March 31, a slowdown compared to 1.1% in the 26 weeks to December 31.

It said footfall was “depressed” in February and March but analysts were content with the update as shares lifted 4.3p to 518.3p.