Positive US economic data pushes FTSE into the black

Banks and miners helped cheer trading but the top-tier failed to claw its way back above the 5200 mark at the end of a poor month for the FTSE 100 Index.

The Footsie pushed ahead following the US output data, closing 42.78 points higher at 5188.52. Wall Street's Dow Jones Industrial Average was also ahead in early US trading.

Official figures showed the world's largest economy growing at an annual rate of 5.7 per cent in the final three months of last year – the fastest since 2003.

David Jones, chief market strategist at IG Index, said the US growth figures seemed to "put firmly to rest" any worries that the economy could slip back into recession.

The robust performance closed out a year in which the economy contracted 2.4 per cent, the biggest decline since 1946.

After falling off a cliff at the start of the year, gross domestic product turned higher in the third quarter, and the quickening fourth-quarter pace reported by the Commerce Department yesterday suggested a sustainable recovery was building.

"It's very solid and gives us a running start into the second half of the year when we can't rely on government stimulus," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

The news sent all Europe's major indices higher, with France's CAC 40 up 1.3 per cent and Germany's Dax rising 1.2 per cent.

But despite London's rise, the top-flight index overall has had a disappointing month and has suffered a correction of more than 4 per cent in January.

In currency trading the pound was lower against both the US dollar and euro, with 1 worth 1.6 US dollars and 1.15 euros.

In London, miners and financial stocks – which had previously borne the brunt of the sell-off – recovered some ground during the session.

Blue-chip risers included Xstrata up 27p to 10311/2p and Eurasian Natural Resources up 161/2p to 909p, as the sector shrugged off recent negative sentiment amid worries over the future growth of the Chinese economy. Fresnillo proved to be the exception, as the silver miner shed 51/2p to 6711/2p.

Banks also recovered after confidence was knocked on Thursday by Standard & Poor's repeated view that the UK is not among the world's most stable banking systems.

Barclays stood 55/8p higher at 2701/2p, while HSBC advanced 171/4p to 6771/4p.

Oil majors were in the spotlight as crude prices edged up from their six-week low below 74 US dollars a barrel following the output data from the US. Royal Dutch Shell and BP – both due to announce annual results next week – were 101/2p higher to stand at 1673p and 1/8p lower at 5867/8p respectively.

Retailers fell out of favour despite department store chain John Lewis reporting that last week's milder weather helped sales rise by an impressive 15.7 per cent. Marks & Spencer rose in the wake of the news, but gave back most of the gains later to stand 11/4p up at 3483/4p.

Figures from the Nationwide Building Society showing a 1.2 per cent rise in house prices for January helped some property-related stocks in the FTSE 250 Index.

Website Rightmove added 271/2p to 5281/2p, helped by a deal with Google to display property maps. Redrow added 11/2p to 131p.

The biggest Footsie risers were Whitbread up 45p to 1409p, Amec ahead 21p to 758p, Xstrata and HSBC. The biggest fallers were ICAP down 101/2p to 3711/4p, TUI Travel off 43/4p to 2593/4p and Prudential 10p lower at 578p.