London shares finish above 5,000 barrier

London’s leading stock market index closed above the 5,000 barrier for the first time in 11 months today buoyed by continuing hope that an economic recovery was underway.

The FTSE index of Britain’s top 100 companies hit 5,004.30 – the first time since October 3 last year – helped also by a strong opening on Wall Street and what one trader, Tim Hughes at IG Index, described as the “feel good factor”.

Mr Hughes said the positive mood was being helped by brokers upgrading a raft of stocks, bullish UK consumer confidence and a giant oil discovery off Brazil by BG Group.

In the US, the Dow Jones industrial average was up 63.94 points at 9,561.28 at 11.30am.

Oil continued to rise, to above $72 a barrel, as signals from an Opec meeting in Vienna indicated that demand was still growing strongly.

A revival in the appetite for corporate takeovers also boosted the positive sentiment.

In London, Cadbury added another 1p to 785p amid expectations that America’s Kraft would raise its £10.2 billion bid for the Dairy Milk maker. Andrew Wood, a Bernstein analyst, believes it will offer 900p a share.

National Express closed flat at 2.2p to 464.5p after a decision due today on whether to succumb to CVC’s bid or merge with Stagecoach was delayed.

BG Group was one of the top gainers, up 42p at £10.97 after it said it could extract two billion barrels of oil in Brazil, near its existing Tupi field.

British Airways rose 10p to 211p amid expectations a merger deal with both Iberia and American Airlines was close.

Miners, which have enjoyed a strong run in recent days, continued to gain on the back of strong commodity prices.

Lonmin was the exception, down 48p at £16.64 after Bank of America Merrill Lynch cut its rating on the platinum miner, despite talk that Xstrata was eyeing a bid. Xstrata lifted 18p to 898p.

Sterling edged up against the dollar again today, up 0.1 per cent to $1.6508. The weakness of the dollar was also helping demand for oil and metals which are purchased in dollars.

Gold held steady at around $1,000 an ounce, having hit that level yesterday for the first time since March 2008. (Robert Lindsay, The Times)

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