FTSE rises to 20-month high

Wednesday, 17 March 2010 11:41

By myfinances.co.uk staff

The FTSE 100 increased 0.3 per cent to 5,639.33 in early trading lifting the index to a 20-month high amid expectations interest rates in the UK and US will stay near their current historically low levels for some time to come.

The US Federal Reserve yesterday repeated its pledge to maintain record low borrowing costs for an "extended period." Meanwhile, Bank of England deputy governor Charles Bean said last night he sees "doubts" about the strength of an economic recovery at home.

The FTSE 100 has climbed to the highest level since June 2008 as optimism that the global economic recovery and higher earnings will support the 12-month rally in equities offset concern that Britain needs to tackle its budget deficit. The measure has rallied 61% since reaching a six-year low on March 3 last year.

Barclays Bank and HSBC Holdings led an advance among financial shares this morning, while Xstrata and Fresnillo paced gains by mining companies. Arriva, an operator of trains and buses, jumped after saying it received a takeover offer.

Barclays, Britain's second-largest bank, climbed 1.1 percent to 361.35p. HSBC, Europe's biggest lender, increased 1.3 per cent to 685.7p.

Xstrata advanced 1.3 per cent to 1,180p. Fresnillo, based in Mexico City, climbed 2.2 per cent to 844.5p. Copper, aluminum, zinc, nickel and other metals rose in London.

Arriva soared 12 per cent to 650p after the company said it received an "unsolicited approach," without identifying the interested party.

Marks & Spencer Group, Britain's largest clothing retailer, dropped 2.2 per cent to 354.3p, its first loss in five sessions. JPMorgan Chase & Co. reduced its recommendation on the shares to "underweight" from "neutral."

Man Group Plc sank 2.6 per cent to 239.9p. The value of the hedge-fund manager's flagship Man AHL Diversified Futures declined 0.1 per cent last week, Man Group said yesterday.

Kingfisher gained 2.4 per cent to 228.3p. Shares in Europe's largest home-improvement retailer were raised to "overweight" from "neutral" at HSBC.

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