Scott Reid: FTSE share index closes on high note

FIRMER miners and energy stocks combined with robust economic output on both sides of the Atlantic gave an end-of-week boost to the London market.

Financial stocks were mostly higher as risk appetite hardened, although Lloyds Banking Group was given the cold shoulder by investors after its full-year results disappointed.

By the close of play, the benchmark FTSE100 index was 76.3 points higher on the day at 5,354.52. The index has gained 3.2 per cent this month after a 4.1 per cent fall in January.

CMC Markets analyst Michael Hewson said leading shares were in positive territory yesterday, following the better-than-expected adjustment to fourth-quarter GDP figures.

According to the Office for National Statistics, the economy grew by 0.3 per cent in the closing months of 2009, up from its initial estimate last month of 0.1 per cent.

Meanwhile, the US government said GDP there had grown at an annual pace of 5.9 per cent, above the previous estimate of 5.7 per cent.

Hewson added: "The market is now looking towards next week's Bank of England meeting to see whether or not the monetary policy committee change their 'wait and see' approach."

Despite the robust economic data, most economists expect the MPC to leave interest rates and quantitative easing on hold next week.

The pound continued to struggle against the dollar in spite of the GDP figures, as concerns over the poor state of the public finances and the prospect of a hung parliament overrode any relief at the stronger-than-expected growth.

Commodity stocks, the biggest fallers during Thursday's session, were the main beneficiaries of the market rebound as metal prices bounced back and crude approached $80 per barrel.

Miners Anglo American, Rio Tinto, BHP Billiton, Kazakhmys and Lonmin added between 2.4 and 3.6 per cent.

Lloyds missed out on the wider rally after the part-nationalised bank posted a 6.3 billion annual loss. Shares in the bank slid more than 4 per cent or 2.4p to 52.5p after it racked up 24bn in bad debts, mainly stemming from rescued bank HBOS. Lloyds was the leading faller in the top flight.

Royal Bank of Scotland also headed south, slipping 0.7p to 37.7p following its own results on Thursday, where a lower-than- expected annual loss triggered a 6 per cent share rise on the day.

Outsourcing firm Serco led the risers yesterday after full-year profits rose 30 per cent and it increased its dividend by a quarter. Shares responded with a 6 per cent rise, up 32p to 553.5p.

Insurance firm Aviva followed close behind with a 17.3p gain to 390.3p despite analysts at ING cutting their target price on the firm ahead of next week's results. ING expects a dividend cut and said the group faced increasing challenges in its core business.

Telecoms firms were meanwhile having a tricky session, with Vodafone off 0.9p to 141.4p, BT down 2.6p to 114.9p and Cable & Wireless off 0.5p at 136.4p.

Property website Rightmove was the biggest FTSE 250 riser, powering ahead 37p or 6.2 per cent to 635p as brokers reviewed their forecasts following better-than-expected results.

Rightmove's underlying operating profits were up 2 per cent to 41.9 million as cost cutting in 2008 helped offset a 6 per cent fall in revenues, which reflected challenging trading conditions at the start of 2009.

It was followed higher in the second tier by Misys, which provides IT services to the banking industry. Morgan Stanley lifted its target price on the stock, helping shares up 6 per cent or 13p to 227.8p.