Banks keep FTSE flying - but only just

Banking shares kept the London market aloft yesterday, though only just, following bullish comment on the sector from investment brokers.

The FTSE 100 Index closed 3.73 points higher at 5,904.49 - having hit an intra-day high of 5,922.99 - as the mining sector came under pressure from softer metal prices and concerns over Japan's nuclear crisis weighed on investors' minds.

The mood was lifted by positive data from the US, which revealed consumer spending rose in February at the fastest pace in four months.

The pound was down against the euro at €1.13 ahead of this morning's final fourth-quarter gross domestic product (GDP) revision figures, as worries persist about the sustainability of the UK recovery in the face of rising inflation. Sterling was up against the dollar at $1.60.

Banks provided support, aided by positive notes from both Barclays Capital and JP Morgan.

Barclays gained 2.4p at 292.4p, followed by Lloyds Banking Group up 0.5p at 60.6p and Royal Bank of Scotland ahead 0.3p at 42.4p.

Drugs giant AstraZeneca surrendered earlier gains after UK and US tax authorities reached agreement over the firm's tax affairs in a move that will boost earnings in 2011.

Under the agreement, AstraZeneca will pay out a total of $1.1 billion (689 million) in taxes, which is less than the amount for which it had budgeted. Despite the deal, shares closed 1.5p lower at 2872.5p.

Fashion house Burberry jumped nearly 2 per cent after analysts at BNP Paribas added it to their list of merger and acquisition targets. Shares were up 31p at 1,147p.

Weaker metal prices triggered losses for miners in London as copper giant Kazakhmys was 22p lower at 1,425p, platinum group Lonmin fell 29p at 1,659p and silver firm Fresnillo dropped 25p at 1,535p.

BP continued to suffer after a Swedish tribunal put its 10bn deal with Russian government-owned Rosneft on hold because of a dispute with shareholders at Russian partner TNK-BP.

The deal - hailed by BP as "ground breaking" when unveiled in January - would pave the way for BP and Rosneft to jointly explore the south Kara Sea in the Russian Arctic. Shares fell a further 6.5p to 477.1p.

Elsewhere, Irn-Bru maker AG Barr rose after the Cumbernauld-based firm reported a 13.3 per cent rise in full-year profits and confirmed sales had continued to rise in 2011. The business, which also makes Tizer, said like-for-like sales rose by more than 10 per cent for the second year running in 2010, helping it deliver underlying pre-tax profits of 31.6m in the year to 29 January.Shares were up 46p at 1,201p.

Aim-quoted penny stock Pinnacle Telecom jumped 7.8 per cent - or 0.03p - to close at 0.42p after the Stirlingshire-based business signalled at its AGM that it was on the acquisition trail and had also signed a contract with TalkTalk to offer faster computer network access to its clients.

Shares at the publisher of the Daily Mail and Mail on Sunday fell after it revealed nearly 200 fresh job cuts at its newspaper publishing arm and a worsening performance at its regional business. Daily Mail and General Trust shares dropped 3.9p to 499.1p.