Markets: Footsie tunes into upbeat bank sector

Strong performances from the banking sector, including Britain's taxpayer-owned banks, helped the Footsie rally yesterday after an analyst note said risks to the sector were shrinking. The FTSE 100 index closed 57.88 points higher at 5,938.87, a rise of 1 per cent, after a difficult week in which Europe's debt woes weighed on sentiment. The UK's banks were boosted by an upbeat note from Societe Generale, which said the risks facing the sector were receding faster than current market expectations. It also noted that the global economic crisis had given banks the opportunity to boost their pricing power. Lloyds Banking Group and Royal Bank of Scotland were among the top risers in the blue-chip index, up 1.4p to 52.8p and 1.4p to 42.2p respectively. Barclays added 3.95p to 275.25p. Ben Critchley, sales trader at IG Index, said: "It's a rare day when we see Lloyds Banking Group near the top of the blue-chip gainers, but the share price is up around 3 per cent on the back of an upgrade for the sector. "This still leaves the shares down by more than 20 per cent for the year-to-date and despite today's strength, it is difficult to see a wholesale shift in sentiment by investors towards the banking sector at the moment." The dollar dropped against the pound as a report on consumer spending added to concerns about the US economic recovery following disappointing unemployment and growth numbers on Thursday. Sterling stood at $1.64 against the greenback but retreated versus the euro at €1.15. The heavyweight mining and energy sectors were also responsible for pulling the market higher, after volatile oil and metal prices strengthened as the dollar weakened. Essar Energy was the top riser, up 22.6p to 451.3p, or 5 per cent, after a note from Deutsche Bank that claimed its oil business is undervalued. Silver and gold producer Fresnillo was up 29p to 1,410p, South American copper miner Antofagasta rose 54p to 1,312p, and platinum producer Lonmin was ahead 38p at 1,572p. Fashion house Burberry was a notable riser, up 30p to 1,290p, as investors returned to the stock after Thursday's post-results sell-off. In corporate updates, Severn Trent shares were 15p higher at 1,517p after higher levels of water consumption helped the regulated company to offset pressure on bills from industry watchdog Ofwat. Severn's dividend was down 10 per cent, but the firm said it remained on track to outperform on its regulated targets between 2010 and 2015. Robinsons and Tango maker Britvic said sales growth had accelerated in its second quarter despite continued pressure on its performance in pubs and bars. It also said it hoped recent price rises would help it claw back some of the margin it has surrendered as a result of rising input costs.Shares were up 6.9p to 432.9p. A flurry of positive notes from analysts helped Edinburgh-based internet matchmaker Cupid continue its rise after upgrading its forecasts earlier this week. Shares gained 3.5p to close at 181p, after starting the week below 130p.