LONDON (Reuters) - The top share index snapped a three-day losing streak to close up 1.1 percent on Thursday as Vodafone’s forecast-beating results and a rebound in miners helped neutralise concerns over U.S. subprime mortgages.
The FTSE 100 was 73.1 points higher at 6,640.2, well off a day’s high of 6,658.8 but recovering from a loss of 1.4 percent in the previous session when worries about the U.S. economy and its risky subprime mortgage market hit equities globally.
Index heavyweight Vodafone advanced 1.8 percent after it posted robust first-quarter revenue and customer growth as booming business in India and Turkey helped offset tough German and Italian markets.
Defence contractor BAE Systems soared 4.8 percent after its acquisition of Armor Holdings cleared an antitrust review by the U.S. Department of Justice and Department of Defence. The stock is still down 5.6 percent for the year.
“When you look at the totality of the background, it strikes me it’s still quite a positive background for the equity markets,” said Mike Lenhoff, chief market strategist at Brewin Dolphin.
“The second quarter results that we are getting in America now, and there won’t be any difference for UK or European companies, are very good. That’s indicative of the things to come for UK and European companies.”
Federal Reserve Chairman Ben Bernanke said on Thursday losses associated with risky subprime mortgages could reach $100 billion (48.8 billion pounds) and a decline in home prices could crimp consumer spending.
“There is still a great deal of caution about the whole subprime lending situation. It’s still extremely unclear how bad it is or how good it is,” said David Buik of Cantor Index.
The iTraxx Crossover index, the most widely watched barometer of European credit sentiment, moved off the tight levels of the day as rating agency Standard & Poor’s said it had downgraded a fresh batch of asset-backed debt. Some ratings were cut from AAA to BBB, a cut of eight notches.
Property companies were also in demand as traders said the sector had been oversold in recent sessions on interest rate concerns.
Land Securities rose 3.4 percent, British Land tacked on 2.7 percent and Sergo, also boosted by an upgrade from UBS, put on 2.1 percent.
Miners added 22 points to the index, rebounding from heavy losses this week when Lonmin, the world’s third-biggest platinum producer, cut its full-year sales forecast.
Lonmin gained 2.5 percent, BHP Billiton put on 3.8 percent, Rio Tinto added 3.3 percent and Antofagasta climbed 5.4 percent as metal prices firmed.
In the financial sector, South African insurer Old Mutual rose 4.6 percent after a newspaper report that Standard Chartered was in talks to buy its Nedbank unit. StanChart, however, lost 0.8 percent.
Barclays said it may add cash to sweeten its agreed 65-billion-euro offer for ABN AMRO as it battles a higher bid from a rival consortium of banks led by Royal Bank of Scotland. Barclays gained 0.2 percent and RBS rose 0.7 percent.
Pub and restaurant group Mitchells & Butlers fell 3.3 percent to top the FTSE 100 losers after Panmure Gordon cut its rating on the stock to “sell” from “hold” following a rise in the previous session. M&B surged on Wednesday after rival pub group JD Wetherspoon said it was on track to meet forecasts.
Elsewhere, Morrison Supermarkets climbed 3.9 percent after it said sales growth had slowed in recent weeks but it was confident that its full-year results would meet expectations.
Additional reporting by Ana Nicolaci da Costa and Michael Taylor