Commodities, Vodafone lift FTSE to 4-month high

Written by:
Subscribe to Oneindia News

LONDON, Oct 11 (Reuters) Britain's top share index rose 1.4 percent to hit its highest close in four months on Thursday as commodity stocks rallied on higher oil and metal prices and heavyweight Vodafone jumped.

The FTSE 100 index ended 1.38 percent higher at 6,724.5 points, not far off its day high of 6,730.1 points, and the highest closing level since June 15.

U.S. stocks also underpinned the market, rising to record highs after Wal-Mart raised its profit outlook, boosting optimism about earnings growth.

''Another strong performance. I think we are mirroring the developments in the U.S. markets. We're seeing risk premiums return to more normal levels,'' said Darren Winder, head of macro and strategy research at Cazenove.

''I think the threat to the outlook for economic activity is not as serious as many investors feared that it might be in the immediate aftermath of the disruption that we saw to credit conditions in the summer.'' Oil stocks contributed more than 30 points to the index as crude prices rose above a barrel. Royal Dutch Shell gained 2.5 percent and BG Group surged 4.7 percent.

BP gained 2.3 percent as its chief executive outlined a plan to address industry-lagging profitability by slashing management layers, adopting consistent producers for developing oil and gas fields and reducing ''unacceptably high'' costs.

Miners were also buoyed, with gold setting a 28-year high, although copper prices gave up gains towards the end of the European stocks trading session.

The top percentage gainer was Vedanta Resources, up 5.8 percent.

Antofagasta rose 4.2 percent, BHP Billiton gained 4.4 percent and Xstrata put on nearly 4 percent.

Vodafone rose 5 percent amid market talk Chief Executive Arun Sarin may be leaving the company. Vodafone officials declined to comment.

Those gains came against a strong European telecoms backdrop, after Spain's Telefonica forecast surging earnings and dividends over the next four years.

Shares in British fund-management firm Schroders gained 4 percent as traders cited market talk that it planned to sell its U.S.

investment arm. Schroders declined to comment.

NORTHERN ROCK But it wasn't all good.

Northern Rock, the British mortgage lender which was especially hard hit by the credit crunch and whose shares have become very volatile, fell 5.7 percent after rallying more than 30 percent in the previous session.

Data from the Bank of England showed that the British mortgage lender may have borrowed a further 2.3 billion pounds from the Bank of England in the past week.

Northern Rock became Britain's biggest casualty of the credit crunch this summer, when it saw a run on deposits after it was forced to seek an emergency funding line from the BoE.

Stock markets were hit heavily at the time, and though they have since recovered some ground, credit worries linger.

British finance minister Alistair Darling said credit conditions had eased in the last few weeks but it was still too early to say when the current troubles in financial markets would end.

Among losers, Sage fell 3.4 percent after Britain's biggest software firm reported slower-than-expected growth at its North America business and said top managers at the division were leaving with immediate effect.

The building sector also struggled as data showed a fall in UK house sales. Persimmon shed 4 percent, Taylor Wimpey lost 4.3 percent and Barratt Developments gave up 3.5 percent.

Reuters SYU GC2236

Please Wait while comments are loading...