Banking sector gains propel FTSE into positive territory

The London market edged 8.39 points higher to 5625.65 after the data, which showed retail sales rose by 0.3 per cent month-on-month in February despite heavy snow.

The figures confounded fears of a 0.2 per cent decline and gave a minor lift to traders after a largely stagnant week for the blue chip index.

US consumers bought an array of goods from necessities to luxury items. January sales, however, were revised down to a gain of 0.1 per cent from the previously reported 0.5 per cent rise. Analysts had expected sales to slip 0.2 per cent last month. Compared to February last year, sales were 3.9 per cent higher.

"There's been a lot of worry about how the economy will transition from government spending to consumer spending and we're starting to see some evidence of that," said Camilla Sutton, a senior currency strategist at Scotia Capital in Toronto.

After the boost given by US jobs figures a week earlier, the Footsie has added just 25 points with corporate and economic data thin on the ground, although the leading share index has held firm above the 5600 level and added to the 18-month high set last Friday.

The pound gained ground against the dollar despite the retail figures, trading above 1.52 against the greenback at one point. Sterling was steady at 1.10 against the euro.

Blue-chip banks meanwhile made strong gains as the sector followed the lead of US counterparts on Thursday night on hopes America will water down its banking crackdown.

Talks broke down on Thursday in America over government plans for tighter bank regulation, prompting suggestions they will end up being less onerous.

Part-nationalised Royal Bank of Scotland and Lloyds Banking Group led the sector's gains, as they were also reported to be among those lined up to handle a bond issue to raise several hundred million euros for one of the world's largest commodities traders.

RBS rose 2p to 425/8p, while Lloyds was 17/8p dearer at 581/2p.

Barclays followed with a gain of 81/8p to 3517/8p.

Among other London stocks, British Airways was 2 per cent higher, or 51/8p up at 2355/8p, despite confirmation that cabin crew strikes will take place later this month.

The leading top flight riser was BSkyB, which gained 5 per cent, or 281/2p to 598p, on vague rumours that Rupert Murdoch could take the satellite broadcaster private.

Retailer Marks & Spencer was also on the up for a second successive session – gaining 43/8p to 3581/8p – after John Lewis followed its strong full-year results by posting another healthy weekly sales update.

Outside the top flight, shares in cooker maker Aga Rangemaster dropped 2p to 118p as investors focused on last year's profit slump despite an encouraging trading outlook.

Nightclub operator Luminar was down for much of the day after it said the cold snap had added to the recent pressure on sales, down 9.9 per cent on a like-for-like basis over its full-year. Shares bounced back later to finish 3/4p ahead at 361/4p.

Waste disposal firm Shanks suffered another day of losses in the FTSE 250, off 4p to 100p, after confirmation on Thursday that private equity suitor Carlyle Group had ended talks and would not pursue an offer.

The biggest Footsie risers were BSkyB, RBS, Eurasian Natural Resources up 51p to 1173p and Inmarsat up 30p to 7911/2p.

The biggest Footsie fallers were Resolution down 11/8p to 721/2p, HSBC and Standard Life down 31/4p to 2115/8p.