FTSE up almost 2% at close

Investors were lured back into the market today by hopes of further stimulus measures in China and optimism ahead of a key EU summit.

FTSE up almost 2% at close

Investors were lured back into the market today by hopes of further stimulus measures in China and optimism ahead of a key EU summit.

The FTSE 100 Index lost £80bn (€99bn) in last week’s turmoil but has since attracted a flurry of buying interest, with bargain hunters helping the top flight close nearly 2% or 98.8 points higher at 5403.3 today.

The rally was driven by mining stocks amid hopes the Chinese government will fast track approvals for infrastructure investment in an effort to safeguard its economy, which the OECD believes should rebound later this year.

London’s progress was mirrored in Germany and France but gains on Wall Street were limited, with the Dow Jones Industrial Average only slightly higher following lacklustre manufacturing activity figures.

US investors were also digesting another poor session for market debutant Facebook following Monday’s 11% slump.

The US dollar remained attractive against the pound, which suffered after the IMF urged the Bank of England to consider cutting rates from 0.5%.

Sterling bought 1.57 dollars but was marginally up against the euro at 1.24.

In London, the heavily-weighted resource sector benefited from the China speculation, as well as higher copper prices, with Antofagasta adding 46p to 1076p and Fresnillo rising 68p to 1387p.

And while fears over Spain and Greece remain, there was some optimism in the eurozone amid hopes that a summit of EU leaders will make headway on the region’s debt crisis.

Although the OECD issued a stark warning to EU politicians to ease the pace of austerity, hopes that new French president Francois Hollande will continue his push for eurobonds as a new form of borrowing at the meeting tomorrow boosted banking stocks.

Royal Bank of Scotland lifted by 5% or 1.1p to 21.95p, Lloyds Banking Group added 1.2p to 27.6p and Barclays rose 8.9p to 188.9p.

In corporate results, Vodafone climbed 3% to near the top of the risers’ board after it delivered adjusted annual profits of £11.5bn, slightly better than City hopes. Shares in the mobile phone giant were 7p higher at 172p despite revealing increased pressure from the troubled eurozone, where Spain recorded an 8% slump in service revenues and Italy saw a 1.9% drop.

And retail bellwether Marks & Spencer was up 6.1p at 344.3p, despite reporting its first drop in profits for three years and downgrading its revenues targets for the period between November 2010 and 2013.

The high street chain, which has 700 stores in the UK, saw shares rise 0.5% after its underlying pre-tax profits of £704.5m beat City expectations of £694m.

Outside the top flight, Homeserve plunged 29% to the bottom of the FTSE 250 Index after the home repairs group revealed it is being investigated by the City watchdog in the wake of accusations over mis-selling and failures in complaints handling.

The Walsall-based group, which has 2.7 million customers, saw shares fall 66.5p to 160.9p, after it said it would downsize its UK operation as it struggles to bounce back from the crisis.

The biggest FTSE 100 risers were Royal Bank of Scotland up 1.15p at 21.95p, Weir Group ahead 79p at 1582p, Fresnillo up 68p at 1387p and Barclays ahead 8.9p at 188.9p.

The biggest fallers were Man Group down 1.15p at 77.65p, Morrisons off 2.4p at 268p, BSkyB down 5p at 690.5p and Burberry off 8p at 1386p.

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