MONDAY MARKET CLOSE: Easing of tensions fuels 1% FTSE rally

Airline stocks were among the biggest risers yesterday as a slight easing of geopolitical tensions gave traders a chance to come out of their trenches and look for bargains after last week’s trail of destruction.

British Airways and Iberia parent IAG soared more than 4 per cent, up 14.1p at 331.2p after being among the worst hit by the recent escalation of conflicts in the Ukraine and Middle East. Budget carrier EasyJet improved 30p to 1,258p as the pressure on oil prices eased.

The FTSE 100 Index rallied 1 per cent, closing 65.46 points higher at 6,632.82.

Tony Cross, market analyst at Trustnet Direct, said: “The heavyweight resource stocks are also faring well in the wake of this morning’s positive broker talk over Rio Tinto, although not all miners are in favour right now – Fresnillo and Randgold are both underperforming as the calmer geopolitical backdrop pushes gold a little out of favour.”

Rio Tinto added 122p to 3,502p after a number of broker upgrades, including one from Credit Suisse. Among the precious metals miners, Randgold dropped 35p at 5,075p, but Fresnillo recovered from early losses to close 10p higher at 1,022p.

Housebuilder Perismmon set the pace at the top of the risers, board, up 55p to 1,272p as new figures from the Council of Mortgage Lenders allayed fears that new rules will cause a “hard brake” on the property market.

But Friends Life was down 4.3p to 315p in the wake of a downgrade from Deutsche Bank as the broker removed its buy rating on the stock.

Outside the top flight, construction firm Balfour Beatty rose 2 per cent after it revealed that it had received and rejected a further merger proposal from rival Carillion. Its shares were 5.8p higher at 243p, and Carillion lifted 3.3p to 324p as the latter company said it was still considering its options on Balfour.