London market lifted by US optimism
Hopes for the economic recovery in the United States have offset the damage caused to banking stocks hit by fears over Spain's struggling economy.A survey showed US home prices rising in March for the first time in seven months, suggesting the US property market, which was at the heart of the global financial crisis in 2008, is strengthening.
The FTSE 100 Index closed 34 points higher at 5391.1 even though Spanish bond yields remained in dangerous territory at around 6.5%, close to the point at which other countries required a bailout. Concerns have continued since Bankia said it needed £19 billion in state aid because of the impact of bad debts.
Sentiment was partly boosted by rumours that the European Central Bank (ECB) is considering pumping more money into the banks following its recent 1 trillion euro of cheap loans. However, a senior ECB member soon poured water on the speculation, saying it was not up to the ECB to rescue banks.
The pound was up against the euro at 1.25 as the single currency continued to suffer at the hands of the region's crisis, while sterling fell against the US dollar at 1.56.
Banks were held back by the fears over Spain with Royal Bank of Scotland down 2%, or 0.3p, at 20.6p, Lloyds off 0.1p at 25.9p, and Barclays was flat at 181p. Commodities stocks were cheered by the prospect of additional measures to invigorate the Chinese economy. Glencore was up 10p at 354.1p.
Europe's woes impacted on building supplies firm Wolseley, which said progress in the US was countered by tough conditions in France and its fear that profits growth in the current quarter will be impacted if the euro continues to weaken against the pound. Shares were down 23p to 2277p.
And Greggs' shares jumped 8% in the FTSE 250 Index after Chancellor George Osborne caved in on his plans to charge the 20% rate of VAT on hot baked snacks such as pasties and pies. The stock was 37.9p higher at 504.5p.
Banknote printer De La Rue saw a 3% drop in its shares despite a 73% rise in underlying profits to £57.7 million in the year to the end of March as it benefited from a recovery plan. Orders at its currency business were up 18% to £183 million although it warned the market is becoming more competitive.
There is also speculation that De La Rue could benefit from a potential Greek exit from the euro and is preparing to print an alternative Greek currency. Shares were down 32.5p at 976.5p.
Banks were held back by the fears over Spain with Royal Bank of Scotland down 2%, or 0.3p, at 20.6p, Lloyds off 0.1p at 25.9p, and Barclays was flat at 181p. Commodities stocks were cheered by the prospect of additional measures to invigorate the Chinese economy. Glencore was up 10p at 354.1p.
Europe's woes impacted on building supplies firm Wolseley, which said progress in the US was countered by tough conditions in France and its fear that profits growth in the current quarter will be impacted if the euro continues to weaken against the pound. Shares were down 23p to 2277p.
And Greggs' shares jumped 8% in the FTSE 250 Index after Chancellor George Osborne caved in on his plans to charge the 20% rate of VAT on hot baked snacks such as pasties and pies. The stock was 37.9p higher at 504.5p.
Banknote printer De La Rue saw a 3% drop in its shares despite a 73% rise in underlying profits to £57.7 million in the year to the end of March as it benefited from a recovery plan. Orders at its currency business were up 18% to £183 million although it warned the market is becoming more competitive.
There is also speculation that De La Rue could benefit from a potential Greek exit from the euro and is preparing to print an alternative Greek currency. Shares were down 32.5p at 976.5p.
© 2013 Press Association