The FTSE 100 added 0.5% on Friday to extend the 1.8% gain posted on Thursday and get comfortably above the 5,000 level with the blue chip index now standing at 5,132. This took the FTSE 100's weekly advance to 6% after suffering heavy losses in the previous two weeks on fears of a double dip recession that have now been mitigated by positive economic data that came out in the US this week.
Miner Antofagasta (LON:ANTO) and medical devices manufacturer Smith & Nephew (LON:SN) led the blue chips with gains of 4%. Insurer Prudential (LON:PRU) was close, climbing 3.7%. Quality and safety services provider Invensys (LON:ISYS) and another base metal focused mining company Rio Tinto (LON:RIO) added more than 3%. Telecom company BT (LON:BT.A), silver miner Fresnillo (LON:FRES), insurer Legal & General (LON:LGEN) and interdealer broker ICAP (LON:IAP) tacke don more than 2.5%.
Commercial property company British Land (LON:BLND) was at the bottom of the pile with a 2% loss. Peers Segro (LON:SGRO) and Land Securities Corp (LON:LAND) climbed 1.5%, as did African Barrick Gold (LON:ABG) and National Grid (LON:NG). Beverage company SABMiller (LON:SAB) shed 1.2% and Capital Shopping Centres Group (LON:CSCG) lost 1%.
US stocks closed with gains on the last day of trading. The Dow Jones Industrial Average climbed 0.6%, the broader S&P 500 index added 0.7% and the technology heavy NASDAQ composite advanced 1%. During the week, the Dow Jones and S&P 500 indexes have gained 5.3% and 5.4% respectively.
The markets were boosted by a jobless claims report released on Thursday, showing that initial claims for benefits dropped to 454,000, which was far below than the projected 460,000. This offset the negative impact from last week’s US employment update that pushed down equities on both sides of the Atlantic after revealing a decline of 125,000 in non-farm payrolls and just 83,000 jobs created in the private sector. This data added to a slowdown in the expansion of the manufacturing sectors the US and Canada reported earlier in the week.
Investors had already been cautious prior to the release of the data amid persisting worries over Europe’s debt woes, China’s monetary policy tightening and the strength of the recovery in the US.
UK stocks got some support from oil and gas supermajor BP (LON:BP), which rallied at the start of the week on reports that it was attracting interest from Middle Eastern investors and would sell stakes in hopes of fighting off potential takeover bids. It was speculated that other energy giants such as ExxonMobil (NYSE:XOM) might make a move for the company in view of the substantial decline in BP’s share price in the aftermath of the disastrous oil spill in the Gulf of Mexico that was caused by the explosion of a Transocean-operated rig on one of BP’s offshore projects in the Gulf.
The stocks started moving upwards after Australia’s Reserve Bank commented that growth in Latin America and Asia was strong to ease worries over the possibility of a double dip recession that has kept the markets under pressure over the recent weeks, while leaving the interest rate unchanged at 4.5%.
The markets posted most of their gains at the end of the week when the jobless claims data came out. Helping out was US based bank State Street, which said its Q2 earnings would surpass expectations to lift banking shares in the US and Europe and inspire optimism ahead of the upcoming corporate reporting season. The International Monetary Fund (IMF) added to the sentiment, upping its forecast for global growth for this year from 4.2% to 4.6%.
The FTSE 100 is currently projected to open with a 0.6% gain on Monday, while the Dow Jones Industrial Average is seen 0.15% lower.