Optimism over global recovery helps drive Footsie closer to 6,000 mark

FTSE: 5,969.21 (+51.50) Mid 250: 11,613.57 (+111.97) Small Cap: 3,282.94 (+9.71):THE FTSE 100 spent time over the 6,000-point mark yesterday, as improving risk appetite on global markets looked to address doubts about its ability to maintain momentum.

London’s benchmark index was off session highs of 6,003.28 in closing trade, rising 51 points to 5,969.21.

Wider sentiment across global markets was helped by a strong showing in New York, where the Dow Jones Industrial Average rose above 12,000 points for the first time since 2008.

Yields are attractive, at least relative to fixed income, and the consensus is that we’re looking at a steady global recovery and continued low base rates. But this apparent rosy scenario could develop into a perfect storm if inflationary pressures in emerging markets, European debt and US housing and unemployment issues continue to deteriorate.

BG was among the best gainers, up 4.2 per cent at £13.30, energised by news of another oil discovery in the Santos basin off the shores of Brazil. Antofagasta, the Chilean copper miner, was 3.3 per cent stronger at £14.22.

Aggreko, the supplier of temporary power generators, made the best single gain on the FTSE 100 after Goldams Sachs started coverage of the stock with a “buy” rating. It rose 5.3 per cent to £14.76 in closing trade.

But the outlook for interest rates in the UK remained at the forefront of the agenda after the release of minutes from the Bank of England’s January monetary policy committee meeting. They showed MPC members voted seven to two in favour of keeping the cost of borrowing on hold, with some discussion of a rate rise.

That matched market expectations, after the shock news of economic contraction in the UK during the fourth quarter of 2010 looked to have put back the likely timing of any rate rise.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “At the very least, we expect most MPC members will want to see how the economy is shaping up early in 2011 after the VAT hike rise and as other fiscal measures increasingly kick in.”

Heritage Oil was under pressure on the FTSE 250 after disappointment that it found large quantities of gas not oil at its prospective field in Kurdistan in Iraq. Its shares fell 29 per cent to 351.6p. – (Copyright The Financial Times Limited 2011)