The London market started the fourth quarter strongly today as positive economic data from the US and renewed optimism over Spain’s banks boosted investor confidence.
The FTSE 100 Index closed 78.4 points higher at 5820 after stress tests published on Friday showed the Spanish banking industry to be less vulnerable than expected.
The country’s lenders have a capital deficit of €59.3bn, stress tests showed, less than the €62bn previously estimated.
Better-than-expected US manufacturing data for September also lifted spirits as a key purchasing managers index reading rose to 51.5 from 49.6, signalling a return to growth.
The pound was down against the euro at 1.25 amid increased optimism over the fate of the single currency, while it was also down against the US dollar at 1.61.
Barclays saw its shares rise more than 3% or 7.5p to 222.4p, while Royal Bank of Scotland was 9.4p ahead at 266.4p and Lloyds Banking Group advanced 1.1p to 39.97p.
The support of Xstrata’s board for the takeover by Glencore International, in a deal which will create a new company worth around £56bn (€70bn), ensured the blue-chip miner’s shares rose 22.5p to 980p, up 2%.
Expectations that the deal will trigger further merger and acquisition activity in the sector spurred on rival miners and resource firms with Anglo American up 74p to 1891p and Eurasian Natural Resources leaping 6.8p to 315.5p.
Glencore, meanwhile, closed down 1.1p at 342p, despite spending much of the session ahead.
Plumb Center firm Wolseley added 41p to 2683p as investors awaited full-year results from the building supplies firm tomorrow.
While the company has suffered from declining revenues in France, the focus will be on its North American operations and efforts to revitalise the UK business.
AstraZeneca was the biggest faller, dropping 30p to 2925p, after the pharmaceutical giant’s new boss stopped a planned £2.8bn (€3.5bn) share buyback scheme.
Supermarkets Sainsbury and Morrison featured on the shortened fallers board after rival Aldi reported a near six-fold increase in operating profits to £102.9m (€129m).
The privately-owned supermarket said it had increased its market share by more than 50% in 2011 as cash-strapped consumers hunt for cheaper deals. Sainsbury was down 1.7p at 345.8p while Morrison was off 1.6p at 283.6p.
Gambling firm Sportingbet saw its shares rise nearly 4% or 2p to 53.5p after it rejected a £350m (€440m) takeover proposal from Britain’s biggest bookmaker William Hill.
The online gaming firm said the approach from William Hill, which has teamed up with European gaming company GVC for the deal, significantly undervalued the company and its prospects. William Hill shares also rose 1.9p to 318.7p.
The biggest Footsie risers were Anglo American up 74p at 1891p, Polymetal International ahead 40p at 1125p, Royal Bank of Scotland up 9.4p at 266.4p and IMI ahead 32.5p at 932.5p.
The biggest Footsie fallers were Astrazeneca down 30p at 2925p, Sainsburys off 1.7p at 345.8p, Babcock International down 4.5p at 922.5p and Morrisons off 1.3p at 283.9p.