Strength from financial stocks and miners lifted Britain's top share index by Friday's close, as investors stayed relatively optimistic and focused on the positive aspects of mixed US employment data. However, weakness from energy stocks Royal Dutch Shell and Cairn Energy ensured gains were muted. The FTSE 100 ended 14.04 points or 0.2 percent higher at 5,997.38 following a 0.7 percent gain on Thursday. It added 2 percent for the week.
Investors shrugged off data that showed US employment rose by a meagre 36,000 jobs in January, far less than expected, as severe snow storms slammed large parts of the nation. Instead, they took comfort from the fact that the unemployment rate fell to its lowest level since April 2009, while strong US economic data earlier in the week also kept optimism intact. "The (payrolls) figures were all over the place and January's not a good month," Steven Bell, director at hedge fund GLC, said.
"But there was some really important data showing very strong non-manufacturing PMI data earlier in the week. Investors have put risk on after the data, equities are not much higher but they've had a strong run." The FTSE 100 gained 9 percent in 2010 after a 22 percent rise in 2009. Old Mutual led the blue chip risers up 5 percent, with sentiment on the insurance sector lifted by analysts pointing to a better outlook for dividends.
Banks were mostly higher as investors stayed positive on the risk sensitive sector, with Barclays the best performer, up 2.4 percent. Miners rallied, bolstered as copper soared beyond $10,000 per tonne. Anglo American added 2.9 percent. However, other moves in commodity prices depressed the index. Royal Dutch Shell led energy stocks lower, off 2.1 percent, with crude knocked on speculation that Egypt's President Hosni Mubarak was about to step down, a development which would ease Middle East tension. Shell was also pressured as BofA Merrill Lynch downgraded its rating for the firm to "neutral" from "buy".
Oil explorer Cairn Energy fell on fears about the progress of the sale of a majority stake in its local unit, Cairn India, to Vedanta Resources. India's oil secretary may meet Cairn Group and Vedanta Resoures on Sunday, ministry and company sources said, to try to hammer out royalty payment issues that threaten the multi-billion dollar take-over of Cairn India.
Water companies Severn Trent and United Utilities were among the top blue chip gainers, up 3.6 and 4.3 percent, respectively, as BofA Merrill Lynch upgraded both firms to "buy" from "neutral" in a sector review. Morrison Supermarkets added 2.8 percent after both UBS and Bernstein Research upgraded ratings for Britain's fourth-biggest grocer. Travel-related firms continued to feel the pinch from the political unrest in Egypt. TUI Travel lost 0.8 percent, also hit by a Nomura downgrade to "neutral" from "buy" in a leisure sector review.
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