UK Stocks closing : Strong miners and banks boosted Britain’s top shares on Wednesday, keeping the index on an upward tilt, underpinned by progress in tackling the euro zone sovereign debt crisis and recent upbeat U.S. data.
The mood, already elevated by hopes European leaders will unveil new measures to solve the crisis by the month’s end, was further lifted when Slovakian lawmakers said they would approve a plan to expand powers in the euro zone rescue fund.
After some encouraging U.S. data, namely last week’s jobs report and ISM manufacturing and non-manufacturing surveys, the market awaited minutes of the last U.S. FOMC meeting, which could be key to bolstering investor confidence.
As long as we continue towards a solution to the European sovereign debt crisis, and as long as we continue to see an improvement in terms of U.S. economic data, it should be enough to encourage investors to take advantage of cheap valuations, said Henk Potts, markets strategist at Barclays Wealth.
The important thing is what we hear from the Fed later today. The expectation is that they’ll suggest that growth is likely to be better in the second half of the year than in the first half, but the risk still remains skewed to the downside.
The FTSE 100 ended up 46.10 points, or 0.9 percent, at 5,441.80, and has notched up gains of about 10 percent since it struck lows a week ago.
Phil Roberts, chief European technical strategist at Barclays Capital, said there was likely more upside for the index, which may reach the March and June lows over the course of the next month, around the 5,600 mark.
A convincing break above that level, however, would be a tough nut to crack.
The mining sector , which remains off 26 percent this year despite a 20 percent rise since early last week, gained in tandem with base metal prices as expectations rose of potential restocking in China.
Miners, led by ENRC and Antofagasta , which enjoyed respective gains of 7.4 percent and 6.9 percent, bounced back from a weaker start after disappointing results from U.S. aluminium group Alcoa .
ENRC grabbed the top spot on the blue chip leader board as Deutsche Bank said it saw the firm’s recent deal to take up a $650 million option to control Kazakh coal producer Shubarkol Komir as a boost for the company.
Silver and gold miner Fresnillo bucked the trend, off 2 percent, after cutting full-year silver production guidance after output fell in the third quarter, as it reinforced safety conditions at all of its projects following the deaths of 10 workers.
Banks , beaten down this year on worries over exposure to the euro zone crisis, rallied, with Barclays the standout gainer in the sector, up 6.4 percent.
Traders attributed Barclays’ outperformance in part to a target price hike from Macquarie.
Societe Generale said it remained very upbeat on UK domestic banks, and reiterated buy recommendations on Royal Bank of Scotland , Lloyds Banking Group and Barclays, despite cutting target prices across the sector.
Sticking with financials, Man Group dropped 6 percent, the top FTSE 100 faller, after the hedge fund firm said its flagship AHL fund fell 5.5 percent last week.
Meanwhile, engineers were boosted, with IMI and Weir up 4.3 percent and 3.7 percent, as Berenberg Bank started its coverage on both firms with a buy rating.
Burberry was another good gainer, up 3.5 percent, after the British luxury goods group issued a reassuring first-half trading update, prompting CFD specialist H20 Markets to upgrade its stance on the stock to hold from sell.
Ex-dividend factors knocked 2.70 points off the FTSE 100, with Capital Shopping Centres , Old Mutual , Smith & Nephew , Tesco , Wolseley , and WPP Group all losing their payout attractions.