LONDON REPORT: FTSE:5,896.25 (+28.34) Mid-250:11,532.69 (+27.66) Small Cap:3,278.06 (+3.04)

LONDON EQUITIES found support yesterday, with investors buying back into riskier sectors after two sessions of sharp losses took the FTSE 100 into negative territory for 2011.

London’s benchmark index rose 28 points, up 0.5 per cent.

Banks and miners were back in demand after their lead role in the selling, sparked by fears of the impact of tighter monetary policy in China, left them looking like good value.

Royal Bank of Scotland was the best performing stock on the FTSE 100, up 6.5 per cent at 44.94p, helped by a report in the Financial Times that it was in talks about leaving the government’s Asset Protection Scheme.

RBS pays a £700 million annual premium under the terms of the scheme, which requires a minimum payment of £2.5 billion. With RBS’s total contribution at £2.1 billion, the earliest it could leave the scheme would be the end of the year.

Upbeat contract news helped software designer Autonomy break up the run of banks and miners on the leaderboard.

The Cambridge-based company, which develops programmes that help corporate clients search unstructured data such as e-mails and text, rose 3.9 per cent to £14.80.

Energy companies advanced as oil traded as high as $90 a barrel in New York. Tullow Oil gained 1.8 per cent to 1,330p, while Cairn Energy rose 1.8 per cent to 445p.

Valiant Petroleum surged 12.1 per cent to 672p, the biggest gain since at least March 2008. The UK oil and natural-gas producer said it found up to seven million barrels of recoverable oil at a Don Southwest “E” Panel exploration well.

The strongest single miner was Rio Tinto, up 0.8 per cent at £42.71.

Warning signs remained though. UK retail sales data for December came in much weaker than expected, showing a 0.8 per cent fall from November, while rising commodities prices hit food sales. Analysts had predicted a fall of up to 0.3 per cent.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The weakness of retail sales in December increases the downside risks to GDP growth in the fourth quarter of 2010, especially as survey evidence has also indicated that service and construction activity was hit appreciably by the severe weather. – (Copyright The Financial Times Limited 2011/Bloomberg)