The UK's top shares ended the first half's last trading day on higher ground on Friday, clawing back from earlier losses as commodities rose and as a Federal Reserve inflation gauge boosted morale in global stocks.
Northern Rock topped the gainers, up 4.7 percent, after Goldman Sachs added the bank to its "conviction buy" list, and following a 12-percent plunge on Wednesday when the mortgage lender warned on profits. Also in the sector, Royal Bank of Scotland rose 1.6 percent and HBOS added 0.7 percent.
The FTSE 100 ended up 36.6 points, or 0.56 percent, at 6,607.9, tracking gains in US stocks and after a choppy session in which it earlier fell as much as 0.8 percent to 6,519.6. The index has gained around 6 percent in the first half, compared to a gain of 3.8 percent in the first half of 2006. In 2006 the index's full-year gain was 10.7 percent.
Wall Street took heart after a US inflation measure watched by the Federal Reserve showed its lowest reading since March 2004, putting the Dow industrials on track to end the quarter on a strong note. Earlier, the Federal Reserve had unnerved European stock markets by dashing hopes of an interest rate cut this year.
The Fed's Monetary Policy Committee held its core rate steady at 5.25 percent on Thursday, acknowledging a recent easing in core inflation but conceding that this might not last. "As far as uncertainties are concerned, there's still lots and lots of that in the background," said Keith Bowman, an analyst at Hargreaves Lansdown.
"There are potential positives there as well and at the moment we're swaying between the two, almost on a daily basis," he added. The oil sector led as strong oil prices boosted oil majors. London Brent crude held around $71 a barrel, holding strong for a third session as the market focused on falling gasoline inventories in the United States and a decline in crude stocks in a key delivery point in the world's top consumer. BP rose 0.7 percent and Shell climbed 1.5 percent.
Rising copper prices helped mining firms join the late rally, putting all of them in positive territory. Antofagasta was up 1.6 percent and Vedanta rose 1.3 percent.
BT Group also featured on the upside, tacking on 1 percent after its Chief Executive Ben Verwaayen told Bloomberg in an interview that the company would do better than most analysts' expectations in sales growth. Property stocks led the downside after HSBC lowered the price targets of some firms in the sector.
HSBC cut its price target on British Land, Liberty International, Segro and Hammerson. It also downgraded its rating for Segro to "underweight" from "neutral".
Segro slipped 2 percent, Liberty International fell 2.4 percent, British Land shed 1.6 percent and Hammerson slumped 1.8 percent. Also in the red, Drax Group, which operates western Europe's biggest coal-fired power station, lost 2 percent to touch a three-and-a-half-month low as traders and analysts cited disappointing expectations over its future dividend payments - detailed in a trading update.