London close: Stocks rally after strong start in US

29th May 2012 16:29

-US markets provide a lift after long weekend-Chinese optimism lifts resource stocks-Greggs celebrates pasty tax U-turnWith US stocks starting on the front foot following a long weekend, London's blue-chip equities were given a boost helping the Footsie to rally in afternoon trade.Investors Stateside looked to make up for lost time with Wall Street closed for Memorial Day yesterday. Newsflow from Greece improved over the weekend after polls showed the pro-bailout party New Democracy as the favourite to win the elections on June 17th. "With the exact cost of a 'Grexit' unknown and conservative estimates suggesting it will be around €1tn, these polls have come as a relief to EU leaders and investors alike and although this by no means suggests a Greek exit won't happen, it will bring some relief to the equity markets as we are seeing again today," said analyst Craig Erlam from Alpari.Markets were clearly shrugging off some disappointing economic data which saw US consumer confidence sink to a four-month low.Optimism over the Chinese economy was also driving gains today after Shanghai Securities News said that Chinese banks have "sped up" lending as the government fast-tracked the approval of infrastructure investments, although other reports out later in the day seemed to contradict that. European bourses on the whole were broadly higher today, although Spain bucked the trend; Madrid's Ibex index was well over 2% lower by the close. After last week's €19bn bailout of financial heavy-weight Bankia, the market has been putting the pressure on Spain to take action and speculation runs rampant that the country could request assistance from the European Financial Stability Facility, pushing bond yields higher as of late.FTSE 100: IAG and resource stocks provide a lift; Wolseley trims lossesOne of the high flyers of the day was International Airlines Group (IAG), the owner of British Airways and Spain's Iberia airlines, rebounding after its slide yesterday when the president of troubled lender Bankia (which holds a 12% interest in IAG) said the bank would sell assets to raise much needed funds.Hopes for the Chinese economy were boosting resources stocks today, including Kazakhmys and Tullow Oil. Steel producer Evraz was a high riser after Goldman Sachs upgraded its rating for coal mining peer Peabody Energy, citing improving demand for coal from China. Meanwhile, oil and gas firm BG Group was in demand after saying it is to sell its majority stake in Brazilian gas distributor Comgás for around $1.7bn. The 'risk-taking' that was benefitting the mining sector was having an adverse effect on defensive categories such as retail, tobacco and utilities, with Tesco, Imperial Tobacco and United Utilities providing a drag, respectively.Wolseley, the plumbers' merchant that was a heavy faller (down 4%) at lunchtime, had pared losses to finish around 1% lower by the close. The firm said this morning that it saw like-for-like growth slow down in its fiscal third quarter as it runs up against tougher comparatives from last year. FTSE 250: Greggs rises on government U-turn on pasty taxThe Government is to back down on plans to introduce VAT on hot savouries, such as Cornish Pasties, boosting shares of bakery chain Greggs. Canaccord Genuity upgraded the stock from hold to buy this morning, saying that the 'pasty-gate' U-turn removes "significant financial and strategic risk for Greggs". Bank note printer De La Rue fell sharply despite reporting revenues well ahead of expectations as it cautioned its current improvement plan is set to cost more than originally anticipated. FTSE 100 - RisersEvraz (EVR) 312.20p +4.28%International Consolidated Airlines Group SA (CDI) (IAG) 142.70p +4.08%CRH (CRH) 1,169.00p +3.36%Tullow Oil (TLW) 1,476.00p +3.07%Petrofac Ltd. (PFC) 1,609.00p +3.01%Kazakhmys (KAZ) 710.50p +2.90%Ashmore Group (ASHM) 338.80p +2.79%Burberry Group (BRBY) 1,439.00p +2.71%Schroders (SDR) 1,230.00p +2.67%Randgold Resources Ltd. (RRS) 5,230.00p +2.45%FTSE 100 - FallersRoyal Bank of Scotland Group (RBS) 20.62p -1.62%Imperial Tobacco Group (IMT) 2,362.00p -1.25%Tesco (TSCO) 301.00p -1.15%Sage Group (SGE) 252.80p -1.13%Wolseley (WOS) 2,277.00p -1.00%Severn Trent (SVT) 1,664.00p -0.95%Sainsbury (J) (SBRY) 291.00p -0.89%United Utilities Group (UU.) 642.00p -0.77%Lloyds Banking Group (LLOY) 25.90p -0.54%G4S (GFS) 279.30p -0.53%FTSE 250 - RisersGreggs (GRG) 504.50p +8.12%Essar Energy (ESSR) 116.30p +6.70%Heritage Oil (HOIL) 128.20p +6.30%Afren (AFR) 123.30p +6.20%Kenmare Resources (KMR) 44.00p +5.85%Hochschild Mining (HOC) 433.00p +5.74%Hays (HAS) 76.10p +5.69%Victrex (VCT) 1,402.00p +5.33%Interserve (IRV) 298.30p +5.00%CSR (CSR) 215.50p +4.51%FTSE 250 - FallersDe La Rue (DLAR) 976.50p -3.22%FirstGroup (FGP) 215.40p -2.58%Bumi (BUMI) 350.00p -2.45%Bwin.party Digital Entertainment (BPTY) 123.60p -2.29%Go-Ahead Group (GOG) 1,102.00p -2.22%SVG Capital (SVI) 262.00p -2.06%Phoenix Group Holdings (DI) (PHNX) 430.90p -1.93%Dixons Retail (DXNS) 14.72p -1.67%Stagecoach Group (SGC) 234.10p -1.22%Informa (INF) 356.30p -1.19%BC