FTSE 100 confidence returns

Wednesday, 23 July 2008 12:00

The FTSE continued its confidence today closing up 1.60 per cent.

The index closed up 85.80 to 5,449.90, working towards the 5,500 level after flirting with crossing below 5,000 last week.

Banks helped to lift the index, with HBOS up 16.86 per cent on talk of a takeover bid from Spanish rival BBVA after the poor showing on its rights issue.

Barclays rose 11.91 per cent, Royal Bank of Scotland was up 11.81 per cent and Lloyds TSB climbed 8.28 per cent.

Insurer Friends Provident was up 13.11 per cent.

As banks rose miners fell, off the back of oil price falls.

Ferrexpo dropped 4.45 per cent, Lonmin fell 3.49 per cent, Eurasian slid 3.15 per cent and Anglo American was down 2.80 per cent.

International Power fell 3.28 per cent.

Outside the FTSE 100, the builders saw a return to form.

Barratt Developments rose 21.21 per cent and Taylor Wimpey was up 14.29 per cent.

Anthony Grech, market strategist at IG Index, said: "Further strength in the US banking sector on the previous day helped UK blue chips in early Wednesday trading.

"This saw some chunky gains by the likes of RBS and Barclays - with a bid rumour regarding HBOS not doing any harm."

He added: "It continues to look like we have seen a sea change in sentiment both here and across the pond over the past week or so, with the market focussing on the positives - and discounting any negative news, at least for the moment."

Mr Grech added the next big push was to breach the 5,500 barrier.

"If, and it is still a big if, we can see the index stage a push through 5,500 and hold onto it for a few days, it adds more weight to the argument that this current run of strength is not just another dead cat bounce."

However, he warned Thursday sees financial results from the high street - with Kingfisher and DSG both putting out statements to the market - which could take some gloss off today's sunny mood in London.

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