Britain’s leading share index rallied to within touching distance of recouping all its losses this year amid unexpectedly strong US jobs figures and a bounce in the oil price.
After a rollercoaster start to 2016, the FTSE 100 climbed more than 1 per cent, or 68.97 points, to 6,199.43, meaning that it has clawed back more than 660 points since its mid-February lows.
City traders said yesterday that next week the index could surpass the 6,242 level that it closed at on December 31 as investors bet that further stimulus measures will be announced by the European Central Bank on Thursday.
On Wall Street, the Dow Jones industrial average was trading above 17,000 points and the S&P 500 above 2,000 for the first time since early January shortly after midday.
The strong end to the week came after American employers went on a hiring spree in February, crushing expectations by adding 242,000 new jobs. Signs of a robust US economy boosted the price of Brent crude, the international benchmark, which was trading above $38 a barrel.
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The recent stabilisation in the oil price has supported metals prices, with copper climbing to its highest in four months, touching $5,059 a tonne on the London Metal Exchange.
It lifted mining shares on the commodity-heavy FTSE 100, which achieved double-digit percentage gains. Glencore and Anglo American, which are slashing costs in the face of the commodity rout, rose by 11.9 per cent to 160p and 11 per cent to 592p, respectively.
Laith Khalaf, a senior analyst at Hargreaves Lansdown, said that UK shares had been trading erratically this year, driven by sentiment, meaning that the FTSE could “take a tumble again . . . At the moment stocks are dancing to the tune of commodities markets, where there has been a big bounce in prices since January. Oil is trading about 40 per cent higher than its January low. A little bit of sterling weakness doesn’t hurt, either, given the global revenue streams of our domestic stock market.”
After the unexpectedly strong jobs figure, most economists do not expect the Federal Reserve to raise its key interest rate next week. Policymakers are continuing to assess the impact on the US of overseas strains and the oil price, although Luke Bartholomew, investment manager at Aberdeen Asset Management, said the Fed’s “wait and see” approach would not be sustainable.