Markets: Aviva axe reports give shares a lift

Insurance giant Aviva was the biggest riser in the FTSE 100 yesterday as traders reacted to widespread reports that the firm was planning to axe underperforming divisions.

Its shares rose 3.7 per cent to 282.7p while expectations that central banks will start a new round of economic stimulus this week helped the wider market make solid gains.

Angus Campbell, head of market analysis at Capital Spreads, said: “Investors are building up for the prospect of more stimulus from central banks this week as Thursday should see an extension to the Bank of England’s asset purchasing program and on the continent the ECB is expected to reduce interest rates.

“This combined with the conclusions of last week’s EU summit has given confidence a boost and attracting the buyers back into the market.”

The FTSE 100 Index rose 69.5 points or 1.3 per cent to 5,640.6, its highest close for nearly two months, with banking shares among the biggest risers.

Barclays’ beleaguered shares enjoyed a rebound as analysts said it was looking cheap after last week’s sell off in response to the libor-fixing fines.

As the bank sought to defuse the scandal with the resignation of its chairman, broker Investec urged investors to back chief executive Bob Diamond and “take full advantage of Barclays’ recent share price underperformance”. It added 5.6p at 168.4p. Lloyds was ahead 0.4p at 31.5p, HSBC advanced 9p to 570.1p, and Royal Bank of Scotland rose 3.7p to 219p despite a downgrade to “hold” from Oriel Securities.

In corporate news, AstraZeneca was 29p higher at 2,882p after it announced a partnership with Bristol-Myers to buy US group diabetes specialist Amylin for $7 billion (£4.4bn).

NEW YORK: The S&P 500 and the Nasdaq closed higher last night, shaking off a surprising contraction in US manufacturing, which some investors interpreted as a signal the Federal Reserve will take more forceful actions to boost the economy.

But the Dow Jones industrial average closed down 8.70 points, or 0.07 per cent, at 12,871.39. The Standard & Poor’s 500 Index was up 3.35 points, or 0.25 per cent, to finish at 1,365.51 while the Nasdaq Composite Index was up 16.18 points, or 0.55 per cent, to close at 2,951.23.