Shares up thanks to banking bounce

LONDON FTSE 100 CLOSE 5,770.98 +58.28

BRITAIN'S leading shares gained 1 per cent yesterday, driven higher by a bounce back from heavyweight commodity issues and banks as hopes for a sustained economic recovery picked up.

At the close, the FTSE 100 was up 58.28 points at 5,770.98, recovering all of Thursday's 0.9 per cent fall, which had been the biggest single-day decline for six weeks.

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Mic Mills, senior trader at ETX Capital, said: "It's just the ebb and flow of a thinly-traded market after the Easter holidays."

Traded volume yesterday was only 60 per cent of the 90-day average volume.

Mills added: "We're going to be poll dancing for the next few weeks as the markets dither about the outcome of the general election, and this will create opportunities for some."

Stock markets across the world rebounded as fears about an outright default by Greece eased – a day after the country's cost of borrowing soared.

The Dow Jones Industrial Average on Wall Street was more than 50 points higher at the time of the London close as signs of a sustained economic recovery boosted US trading.

Corporate news was thin on the ground in the UK, but economic data came under the spotlight as figures showed factory gate prices rose at their fastest pace for 16 months in the year to March.

The rise re-ignited fears over inflationary pressures and raised the potential for interest rate hikes, which strengthened the pound. Sterling rose to $1.53 against the dollar, but fell back to 1.13 against the euro as pressure on the single currency eased in the wake of fresh Greece hopes.

There was also cheer in the UK retail sector after John Lewis said department store sales jumped 30 per cent during Easter week.

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This added to better-than-expected sales figures from Marks & Spencer on Thursday. M&S, which said like-for-like sales rose 5.1 per cent in its fourth quarter, added 2.7p to 370.2p, while Next improved 30p to 2,271p.

Commodity stocks were among the biggest risers, led by silver miner Fresnillo with a 30p gain to 884p.

Shell was also 35.5p higher at 1,887p, with rival BP up 4p at 641.1p, even though oil prices slipped just below $85 a barrel.

Insurer Aviva joined them on the risers board after the group said it planned to expand in the fast-growing Asian insurance market, returning to Singapore after an absence of five years. Aviva's shares lifted 8.7p to 388p.

The recent signs of economic recovery have also helped recruitment firm Michael Page International, which rose more than 3 per cent in the second tier after a positive trading update. The group said profits were up 8 per cent in the first quarter, helped by a turnaround in the UK jobs market. Michael Page International lifted 15.5p to 439p.

Also in the FTSE 250, directories firm Yell was 2p dearer at 46.5p after ratings agency Standard & Poor's revised its outlook on the group to stable from negative.

Among the banks, Royal Bank of Scotland rose by 0.7p to close at 44.7p amid the surprising news that the Wellcome Trust – one of the UK's largest charitable bodies – had teamed-up with buy-out firm Blackstone to bid for the 312 William's & Glyn and six Scottish NatWest branches that RBS is being forced to sell. Meanwhile, Lloyds Banking Group was up 1.53p or 2.5 per cent at 64.09p.