LONDON (Reuters) - Heavyweight telecom BT led the FTSE 100 higher on Friday, with the blue-chip index setting fresh 5-1/2 year highs as defensive stocks once again outperformed growth-sensitive peers.
The FTSE 100 finished up 32.24 points, or 0.5 percent, at 6,624.98, its highest close since October 2007 and just 4.7 percent off of 1999's all time high. It is the index's seventh straight session of gains.
Sectors such as telecoms, consumer staples and healthcare combined to add over 28 points to the index, enough to counteract a 15 point drag from commodity related stocks, which usually outperform with economic optimism.
"There's a move towards these defensives, and it's not really risk on... but it's been a another fairly good week, we're still grinding higher and making progress at new highs," Mike van Dulken, head of research at Accendo Markets, said.
"The worrying thing is that the participants aren't the risk names that normally gain in rising markets."
Telecoms surged 10.4 percent, up 31 percent year to date, in contrast to miners, which slipped 2.3 percent and are down 12.6 percent on the year.
Leading the telecom sector was BT, which contributed over 10 points alone to the broader index's advance.
Shares in the telecoms group leapt 12.3 percent, rising above 300 pence for the first time since November 2007 as it beat annual forecasts and gave a good outlook ahead of its pricing showdown with BSkyB.
BofA Merrill Lynch, describing BT's results as "very strong", upgraded its rating on the stock to "buy".
Defensive sectors - which tend to ride the ups and downs of the economy with a relatively consistent performance - have led the UK benchmark in its gains of around 12 percent this year.
This comes as interest rate cuts and injections of liquidity by central banks around the world have lifted equity markets in spite of a stuttering global economy.
The Group of Seven finance chiefs were expected to look to central banks to find new measures to stimulate the economy and asset prices over a two day meet.
"The only game in town is ultra-easy and unconventional monetary policy by central banks, and if the G7 meeting confirms that this is going to continue for a while, then the stock market can continue to ignore operating realities for a bit longer," Jeremy Batstone-Carr, analyst at Charles Stanley, said.
"The question has got to be 'when' will the FTSE hit a new all-time high, rather than 'if.'"