LONDON (Reuters) - The leading share index ended 1.1 percent higher on Tuesday after data showed U.S. consumer confidence rose, with energy stocks, cigarette makers and food retailers leading the gainers.
The FTSE 100 .FTSE closed 46.43 points higher at 4,411.72, reversing earlier losses after the U.S. data and shrugging off concerns of heightening geopolitical tension on the Korean peninsula. Volumes on the FTSE 100 were at some 70 percent of the index's 90-day average daily volume. The bourse was closed Monday for a bank holiday.
The UK benchmark is down 0.5 percent this year, but has rallied 27.5 percent since hitting a six-year trough on March 9.
“The real test is whether we can breach 4,500 and then go on higher. If not, we will probably remain in this consolidation, range-bound trading,” said Angus Campbell, head of sales at Capital Spreads, adding that a strong supporting level at 4,300.
“Today we have very encouraging news from the U.S. which has a knock on effect here in London,” Campbell said.
U.S. consumer confidence soared in May to its highest level in eight months, the industry group Conference Board said, suggesting underlying improvement in the economy after a grim first quarter that witnessed a record plunge in home prices.
Tobacco stocks British American Tobacco (BATS.L) and Imperial Tobacco IMT.L advanced 3.9 and 2.7 percent, respectively, while food retailers Tesco (TSCO.L), Morrison Supermarkets (MRW.L) and Sainsbury (SBRY.L) rose between 1.8 percent and 3.5 percent.
In the banking sector, Barclays (BARC.L), HSBC (HSBA.L) and Standard Chartered (STAN.L) put on 0.7 percent to 1.7 percent, paring earlier losses. However, Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L) stayed in negative territory.
Miners were also generally firmer, with Eurasian Natural Resources ENRC.L, Fresnillo (FRES.L), Lonmin LMI.L, BHP Billiton BLT.L and Xstrata XTA.L up 0.9 percent to 6.8 percent.
Rio Tinto (RIO.L) eased 0.6 percent. The miner has agreed to cut key iron ore prices to Japanese steelmakers by a third in this year’s first contract, setting a benchmark analysts say China will almost certainly reject after six years of surging prices.
Separately, Aluminium Corp of China (Chinalco) is discussing possible adjustments to its investment deal with Rio in line with changes to market conditions, its President Xiong Weiping told China’s Caijing magazine.
Among individual movers, Rexam REX.L, the world’s largest beverage can maker, rose 3.4 percent after Goldman Sachs upgraded the stock to “buy” from “neutral” and added it to its “conviction buy” list.
Shares in Wood Group (WG.L) rose 5.9 percent as traders noted vague speculative interest in the mid cap oil services group, with FT Alphaville suggesting that blue-chip peer Amec AMEC.L could be eying a bid for the firm.
A spokesperson for Wood Group said there was no particular reason for the share price rise, with no statement planned from the company. Amec, which was not immediately available to comment, added 3.2 percent.
In the oil services sector, Petrofac (PFC.L) gained 2.5 percent.
Thomas Cook TCG.L shed 4.3 percent. Its debt-laden parent Arcandor AROG.DE said talks with rival Metro MEOG.DE about a tie-up of their department store chains were still on, pouring cold water on speculation it had walked away from a possible deal.
Additional reporting by Simon Falush; editing by Karen Foster