The London market chalked up its third consecutive session of gains on Friday, helping the FTSE 100 to post its biggest weekly gain since November and end a testing second quarter on a positive note.
The fuel for the latest advance came from the US Federal Reserve, which overnight increased interest rates by the expected quarter-point to 5.25 per cent but then softened its tone on the need for further rises.
Mining stocks were at the forefront of the latest advance as the Fed comments saw metals prices spike higher. Xstrata rose 3.1 per cent to £20.50, while Anglo American advanced 2.5 per cent to £22.18 and BHP Billiton climbed 1.75 per cent to £10.49.
However, the day’s best blue chip performer was Centrica, the owner of British Gas, which rose 4.1 per cent to 285¼p after Gazprom boss Alexei Miller told a news conference in Moscow that he is still interested in buying the company. although he stressed there were no current discussions.
Gazprom recently entered the UK gas market through the purchase of small Cheshire-based supply business called Pennine Natural Gas.
The final scores showed the FTSE 100 up 41.9 points, or 0.7 per cent at, 5,833.4 - a gain of 2.5 per cent over on the week. But over the quarter, which was notable for a big sell-off in May, the blue chip index fell 131 points, or 2.2 per cent.
Meanwhile, the FTSE 250 finished 119.2 points, or 1.3 per cent, higher at 9,422.7, extending its gain over the week to 2.5 per cent. Over the quarter, the mid cap index lost 427 points, or 4.3 per cent.
Market turnover was good with over 3bn shares changing hands for the first time this week. Associated British Ports, down 1.6 per cent to 903p, was one the day’s most actively traded stocks after Australia’s Macquarie Bank pulled out of the bidding for the company.
Almost 160m ABP shares changed hands as arbitrage positions were unwound. Traders also said Goldman Sachs had been in the market buying stock to support its 910p-a-share offer, which was recently recommended by AB Ports.
Bid rumours continued to swirl around Corus. Its shares gained 2.5 per cent to 456½p as rumours of a bid from India’ Tata Steel were dusted down and given a fresh airing.
However, HSBC bucked the strong market trend, easing 0.4 per cent to 951½p on concerns index tracking funds will be forced to sell its Hong Kong-listed shares.
Overnight the complier of the Hang Seng index, HSI Services, said it planned to cap the weighting for any single Hang Seng constituent stock at 15 per cent. At the moment HBSC’s weighting in the index is just over 30 per cent.
Vodafone also failed to keep pace with the wider market, rising just 0.2 per cent to 115¼p on rumours that it is set to guide forecasts lower. Analysts, however, were sceptical given that Vodafone reaffirmed its guidance at the end of May.
Lower down the market, Wolfson Microelectronics, which designs chips for Apple’s iPod, rose 4.3 per cent to 447½p after ABN Amro reiterated its “buy” recommendation in the wake of a meeting with the company.
“They indicated that they were ‘quite comfortable’ with current market consensus and earnings per share and that they knew of no delay regarding next generation iPod’s,” ABN said.
But Spirent Communications, the telecoms testing specialist, slipped 3.2 per cent to 37 /2p after Goldman Sachs slapped a “sell” rating on the company and said it was likely to disappoint investors in the next 12-months.
Among the small caps, Isoft fell 5.8 per cent to 77¼p unsettled by comments from Bill Green, the head of Accenture, the US consultancy using iSoft’s software on the massive project to overhaul the IT services of the NHS.
Asked by an analyst about the ailing software company Mr Green said:“We’re watching the iSoft situation closely, as you might expect we would. We have a series of alternatives that we can take forward, and we’re prepared to go with those if that becomes necessary,” Bill Green said.
Of new issues, China Biodiesel made a solid debut as it became the latest Chinese company to float on Aim. The renewable energy group closed at 99p, up 16.4 per cent from its placing price of 85p.
600 Group, the machine tool manufacturer, rose 6.4 per cent to 58p as traders belatedly realised Andrew Perloff, the chairman of Panther Securities, had amassed a 3 per cent holding.
Scapa, the supplier of technical tapes company, marked time at 19½p despite the Hanover Investors, the activist investor which transformed the fortunes of 4imprint, declaring a 4.4 per cent stake.
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