Britain's top share index rose on Tuesday, with oil majors and banks gaining as above-forecast data from the United States and signs that the Chinese economy could avoid a hard landing boosted appetite for riskier assets. Britain's FTSE 100 ended 29.67 points higher, or 0.5 percent at 5,803.13 points, after inching up 0.1 percent on Monday.
Concerns about a slowdown in the US economy eased after data showed retail sales fell less-than-expected in May, though they still showed a first drop in 11 months. Chinese data showing the world's second-biggest economy may avoid a hard landing amid efforts to prevent it from overheating renewed the market's appetite for risk. Integrated oils were among the gainers, up 0.9 percent, as Brent crude prices hit their highest in more than five weeks on the back of improved risk appetite.
"Appetite for buying does seem to be creeping back in right now, aided by better-than-expected retail sales data out of the US," said Ben Critchley, sales trader at IG Index.
"However, sentiment is crucial right now, and there's no shortage of potentially negative factors floating around," he said, referring to a Greek debt crisis and a US borrowing predicament. Traders said concerns also remained about the state of the British economy, as figures showed inflation held at a two-and-a-half-year high in May.
Banking stocks held up well - despite Standard & Poor's rating agency downgrading Greece to triple C on Monday, the lowest level of any country - with traders saying the Greek debt crisis was factored into banking stocks as long as no further bad news emerged.
Broker comments added to the action on the FTSE 100, with ITV adding 4.4 percent to top the leaderboard after Liberum Capital argued the broadcaster's price could advance more than 10 percent from this point. Schroders rose 3.9 percent after HSBC lifted its rating on the investment manager to "overweight" on valuation grounds.
Weir and IMI rose 1.2 and 2 percent respectively as J.P. Morgan said business conditions remained favourable, with current lead indicators implying capital goods companies were more upbeat than equity market sentiment. Tesco erased earlier falls to end flat after posting a fall in quarterly underlying profit that missed forecasts. "Tesco seems to be seen as tomorrow's story. The planks to its strategy are in place, particularly in furthering international diversification," said Richard Hunter, head of UK equities at Hargreaves Lansdown.
"Until the company is seen to be delivering fully on this potential, the shares may well continue to struggle to make significant progress." On the downside, commodities trader Glencore fell 4.5 percent after its first trading update as a listed entity. In its update, Glencore refuted speculation it might bid for Kazakh miner ENRC, whose shares fell 1.9 percent. Imperial Tobacco shed 2.2 percent as Credit Suisse and Natixis cut their respective target prices after its trading statement on Monday, when it warned of problems in Spain.