FTSE bullish on hopes of eurozone deal

Hopes that European leaders will agree a new raft of measures to ease the eurozone debt crisis yesterday lifted London’s blue-chip index to its highest close since early August.

A Sunday deadline for decisive action is now unlikely to be met, but traders pinned their hopes on the chance that a second meeting of European leaders next week will deliver radical measures to shore up the battered eurozone region.

Yusuf Heusen, sales trader at IG Index, noted that the gains were made on light trading.

He said: “Most traders appear to be waiting in the shadows, happy to see what the latest round of Franco-German political arm-wrestling will throw up come Monday.”

While the FTSE 100 gained nearly 2 per cent to end the week at 5,488.65, the CAC-40 in France and the Dax in Germany also extended their earlier gains, up 2 per cent and 3 per cent respectively

The euro lost ground against the pound, which rose to €1.149 against the single currency. Sterling also rose against the US dollar, to $1.594.

Banks were among stocks on the front foot, with Barclays up 6 per cent, or 9.95p, to 181.95p. Lloyds Banking Group added 1.3p to 32.9p and Royal Bank of Scotland was up 0.8p to 24.4p. Insurer Aviva was 15.1p higher at 339.3p.

Miners were also buoyant on hopes that global economic prospects would be boosted by a eurozone debt deal. Xstrata was up 55.7p at 951.5p and Antofagasta was ahead 57p at 1,096p.

In the FTSE 250 index, shares in Thomas Cook jumped 13 per cent after the holidays giant announced a new short-term loan deal with its banks.

The arrangement will provide Thomas Cook with an extra £100 million of headroom for its seasonal cash low point of December and January.

Shares have slumped 80 per cent in six months, but were up 5.95p to 51.5p yesterday as analysts said that the deal reduced the need for a cash call to shareholders.

There was also a much-needed rally for online grocery firm Ocado after Bank of America Merrill Lynch upgraded it from “neutral” to “buy”.

The stock has been plagued by negative City comments since its flotation, but enjoyed a rally yesterday – up 5 per cent, or 4p, to 88.8p – after the broker said it believed a recent trading slowdown had more to do with supply chain problems rather than a drop off in demand.

The growth of employee-owned Waitrose, which revealed an 11.7 per cent jump in weekly sales, also highlights plenty of demand in the sector, Bank of America added.

Weir Group was one of the top performers after investment bank UBS placed the pumps and valves firm on its list of top ranking stocks.

The Glasgow-based firm, which is a major supplier to the oil and gas industry, saw shares leap 6 per cent, or 98p, to close at 1,773p.

Shares in Glasgow’s other top-flight stock, Aggreko, only trickled upwards despite the temporary power supplier again raising its full-year profit guidance, from £315m to £320m. Analysts said out-performance was already factored into its share price, and the firm gained just 6p to end at 1,710p.