Positive news in Europe boosts FTSE

Published on Monday 30 May 2011 20:14

LONDON FTSE 100 CLOSE 5,989.99 +51.12

HOPES of a second bailout for Greece lifted confidence on the London markets yesterday and offset economic gloom from the United States.

European Union officials said a review of Greece's position was likely to conclude over the next 24 to 48 hours, while finance ministers were reported as saying they wanted to avoid a complete restructuring of the country's debt.

The FTSE 100 Index closed 51.12 points, or 0.9 per cent, ahead at 5,989.99, as investors returned from what was a bank holiday weekend on both sides of the Atlantic. The FTSE touched 6,009.98 earlier in the session.

Yusuf Heusen, senior sales trader at IG Index, said: "Investors came back from the bank holiday feeling as if a cloud had been lifted - or at least temporarily blown out of sight - with the latest news concerning Greek debt.

"With the FTSE 100 trading back roughly where it started this year, it may be expecting too much for significant further gains from here until the details of the Greek package are done and dusted."

London's gains came despite Chicago PMI figures in the US showing a drop in manufacturing activity in May, while an index of US consumer confidence fell to its lowest reading for six months.

The pound was down against the euro at €1.14 as the single currency strengthened in wake of the developments with Greece. Sterling was also down against the dollar at $1.64.

Building supplies firm Wolseley was one of the top blue-chip performers amid expectations that it will put three of its UK divisions up for sale. The company, which is due to post a trading update this morning, rose 3 per cent, or 67p, to 2,058p.

Commodities trader and mining firm Glencore posted gains despite broker Nomura sticking a "reduce" verdict on its shares with a target price of 550p.

Analysts said Glencore's management is the most entrepreneurial in the sector, but its valuation is too expensive relative to its peers. The group floated last week with a value of more than 36 billion and yesterday closed just above its float price of 530p, rising 7.4p to 531.1p.

Support services firm Serco added 19.5p to hit 577p after it announced the acquisition of Indian business services firm Intelenet for up to 385 million..

Other FTSE 100 risers included credit reference agency Experian, which climbed 24p to 800p after broker Credit Suisse issued a positive note on the stock and raised its target price to 910p.

Elsewhere, the appointment of Allan Leighton to sort out set-top box maker Pace helped the FTSE 250 firm improve nearly 3 per cent, or 2.9p, to 117.8p. The former chairman of Royal Mail and ex-Asda chief executive will become Pace's chairman, taking over from long-term incumbent Mike McTighe.Among Scottish stocks, Glasgow-based temporary power supplier Aggreko was up 2.9 per cent, or 53p, to close at 1,867p following news of Japan's continuing recovery work.

But Edinburgh-based oil and gas explorer Cairn Energy headed in the opposite direction, down 1.2p to 441.2p, after talk of Vedanta Resources lowering the price it will pay to buy a controlling stake in Cairn's Indian subsidiary.