Banks, lifted by upbeat broker comment, helped hoist Britain's top share index back above the 6,000 level on Tuesday as investors shrugged off eurozone debt worries for the time being. The FTSE 100 index closed up 57.73 points, or 1 percent, at 6,014.03, snapping a three-day losing streak.
Banks were the standout gainers after falls on Monday, led up by Barclays which rose 5.5 percent. Societe Generale named the lender one of its preferred stocks in the European sector which it upgraded to "overweight". Global banking heavyweight HSBC put on 2.4 percent after Citigroup upgraded it to "buy" from "hold".
Traders said European sovereign debt fears faded after Portuguese Finance Minister Fernando Teixeira dos Santos said there was no plan to seek a bailout from the EU and IMF. Buyers came in for miners as metal prices rebounded, and after aluminium producer Alcoa kicked off the US fourth-quarter earnings season with profits that topped Wall Street forecasts.
Paul Kavanagh, a partner at Killik & Co, envisages the FTSE 100 index falling back below the 6,000 level this month after strong recent gains, though has a 6,600 end of year target. "You've got the earnings numbers coming through in the US, which should be positive but I just feel that this market has moved quite a long way, so it could just boil over a little bit as we head in towards the last part of January," he said.
Energy stocks were in demand, following crude prices higher, with BP advancing 2.8 percent. Positive broker sentiment helped oil explorer Cairn Energy, up 5.5 percent, as Morgan Stanley resumed coverage as "overweight", while plumbing supplies firm Wolseley, up 5.9 percent, was aided by a Citigroup target price hike.
ARM Holdings topped the blue chip leader board, adding 7 percent, with traders citing rehashed bid talk. Smith & Nephew was the biggest FTSE 100 faller, off 5.9 percent after the maker of replacement knees and hips hit a record high on Monday on a report it received a bid last month from Johnson & Johnson, which was not disclosed.
Investec downgraded its rating for S&N to "hold" from "buy" saying the lack of comment from either company yesterday seems to suggest that a bid is not pending in the short term. Capital Shopping Centres shed 2.8 percent after stakeholder Simon Property said it would not bid to buy the largest British mall owner. Retailer Marks & Spencer also fell 2.8 percent, disappointing investors with its trading update. Arden Partners analyst Nick Bubb said he was "underwhelmed, but not downhearted" about M&S's numbers, keeping a "buy" rating on the stock.
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