Retailers helped London’s main indices regain closing levels unreached since last summer while upbeat analysis on the long-term outlook for the FTSE 100 helped the improving mood.
Ocado, the online grocer delivering Waitrose products, stood out after upbeat numbers from its partner John Lewis, the unlisted but influential department store chain and owner of the Waitrose food shops.
They were enough to make Ocado the top performer on the FTSE 250, up 10.7 per cent to 131¾p.
John Lewis’s numbers stoked hopes of a stronger UK economy and energised the wider sector ahead of earnings reports from a cross section of the high street due next week.
“The latest impressive John Lewis sales are a boost to hopes that consumers are perking up overall and will help the economy return to growth in the first quarter and then continue to expand,” said Howard Archer, chief UK and European economist at IHS Global Insight.
Dixons Retail rallied 6.5 per cent to 17p on hopes that high levels of demand for the latest model of Apple’s iPad, combined with the UK’s looming switchover to digital television broadcasting, would lift sales of electrical goods.
Kesa Electricals, Dixon’s peer and the owner of the Darty chain of electrical stores in France, was 3.2 per cent higher at 77¼p.
Debenhams, the mid-cap department store, was 0.7 per cent higher at 75¾p ahead of its trading statement on Tuesday.
The FTSE 250 rose 0.8 per cent to 11,792.92, a rise of 93.64 points. It was up 2.3 per cent over the week, which it finished at its best closing level since July 26.
Blue-chip retailers were not far off the gains seen on the mid-cap index.
Fashion chain Next, which reports annual results on Thursday, was 1.2 per cent higher at £29.35.
J Sainsbury was up 0.8 per cent to 303p ahead of its fourth-quarter trading statement on Wednesday.
Kingfisher, the parent of home improvement chain B&Q, was 0.9 per cent higher at 302.3p ahead of its annual numbers.
Tesco rose 2.1 per cent to 328½p, recovering from pressure on Thursday after it announced the departure of the head of its core UK business, Richard Brasher, following its first profit warning in 20 years issued in January.
Philip Clarke, Tesco’s group chief executive, said he would take direct control of the UK business.
Overall, the FTSE 100 ended the session 24.86 points higher at 5,965.58, a rise of 0.4 per cent. Over the week, it rose 1.3 per cent to its best closing reading since July 8.
Analysts at Citigroup helped cheer the mood with a prediction that the FTSE 100 “could double in a decade”.
Adrian Cattley and a team of Citi analysts said in a note: “You don’t have to be a lunatic bull to expect good returns from UK equities . . . Total returns are outstripping both the US and Europe in sterling, [highlighting] the importance of valuation and dividends . . . History shows that owning equities after a period of relatively poor returns has increased the chances of making above- average returns.”
Citigroup was not alone in advising its clients on how to prepare for an economic rebound. UBS described Royal Bank of Scotland as a “recovery play” and upgraded its rating on the stock from “neutral” to “buy”.
John-Paul Crutchley, analyst, said in a note to the bank’s clients: “A more positive view on the UK, combined with improving economic momentum in the US . . . will pave a way for improved performance in RBS’s core business.”
RBS closed 6.3 per cent higher at 28¼p.
The comments came as UBS also raised its forecasts for economic growth in the UK ahead of next week’s Budget.
Matthew Gilman, strategist, said the bank expected gross domestic product to grow 0.6 per cent, turning away from its earlier forecast of a contraction of 0.1 per cent.
Tullow Oil was prominent on the leaderboard after it announced an oil find at one of its prospective wells off the shores of Ghana. Its stock rose 3.9 per cent to £15.28.
Back on the FTSE 250, Imagination Technologies, which supplies the graphics chip used in the iPad, rose 9.6 per cent to 701p after Goldman Sachs lifted its price target on the stock from 850p to £10.00.
Simon Schafer, analyst, wrote: “Royalty exposure towards tablets and smartphones, and Apple in particular, makes it the company with the highest earnings growth in our European tech coverage.”
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