Footsie buoyed by firmer prices for financial and mining stocks

FTSE:5,268.66 (+138.74) Mid-250:10,243.15 (+246.05) Small Cap:2,951.14 (+41.31)

LONDON EQUITIES rose yesterday, moving to catch up with the gains seen across the rest of Europe’s stock markets over the previous session, with financial stocks leading the advance.

Sentiment toward financial stocks was helped by news over the previous session of the merger between Greece’s Alpha Bank and Eurobank, a move many traders hoped would represent an important step away from the sense of crisis among banks on the periphery of the euro zone.

After it energised the sector on continental bourses on Monday, Royal Bank of Scotland rose 8 per cent to 23.64p. Lloyds Banking gained 7.8 per cent to 32.03p. Barclays was 6.7 per cent higher at 165.4p.

Wider financial stocks also made gains. Hedge fund Man rose 4.7 per cent to 217.4p.

Prudential, the UK’s biggest insurer by market value, climbed 4.4 per cent to 598p, while Aviva advanced 5.8 per cent to 329.7p and Old Mutual gained 4.7 per cent to 118.3p.

Overall, London’s benchmark index returned from its extended late-summer weekend with a gain of 2.7 per cent to 5,268.66, a rally of 139 points.

It came after an overall rise of 1.8 per cent over the previous trading week.

“The charts indicate that buyers came in strong following the spike low at 5,014.79 during the early part of Friday’s session,” said Enis Mehmet, analyst at Autochartist.

“This is a potentially bullish development that could lead to a breakout above the recent top at 5,254.17 . . . Traders seem to have more clarity and conviction in their decision process leading to the conclusion that an upward bias is developing with the prime objective at this time a breakout over 5,377.23,” he said.

With traders more inclined to take risks across global markets, heavily weighted mining stocks added their influence to the gains. ENRC, a ferroalloys producer, rose 5.9 per cent, taking its shares to 660p.

There was little fresh corporate news for investors to absorb as they returned from the long weekend.

But news that global advertising agency WPP intended to acquire Japanese internet marketing specialist DA Consortium from Asatsu-DK for ¥36,550 (£291) per share looked well-received. WPP’s shares rose 2.3 per cent to 629p. – (Copyright The Financial Times Limited 2011/Bloomberg)