Miners and Ford help FTSE 100 to a ten week high

Leading shares have reached their highest level since the middle of February despite a slump in UK GDP, as mining stocks climbed and investors took heart from an opening rise on Wall Street after better than expected figures from Ford.

On the final day of another volatile week which encompassed the UK budget and key results from a number of major US companies, the FTSE 100 ended 137.76 points better at 4155.99, a 3.43% gain. The rise accelerated after Ford reported a quarterly loss much lower than analysts had been forecasting, prompting a 120 point increase on the Dow Jones Industrial Average by the time London closed. Joshua Raymond, market strategist at spread betting group City Index said:

"The markets have finished the week strongly after a poor start. A rise in oil and promising results from Credit Suisse, American Express and Ford have helped to spur investor optimism that this first quarter's earning season may spark a revival in equity markets."

Miners were in demand after Cazenove issued a positive note, upgrading its rating on the sector from neutral to overweight. It said:

"Although on balance we are cutting earnings via commodity price changes today, we believe economic stabilisation evidenced in an array of global lead indicators and the remarkably robust Chinese economy suggest that commodity pricing has probably seen its lows."

News that China had been buying gold for its reserves also helped sentiment, and pushed the metal to a three week high at one point.

Xstrata was the biggest riser in the leading index, adding 75p to 600p as Cazenove named the company its top tip in the sector, while Exane BNP Paribas was also positive. Eurasian Natural Resources Corporation climbed 52p to 602.5p, Kazakhmys was up 39p at 515.5p while Anglo American added 97p to £14.22.

Insurers moved higher ahead of a trading update due on Monday from Aviva, up 34p to 273.25p. Panmure Gordon issued a buy note on Aviva with a 330p target. It said:

"We think there could be positive comments [in next week's statement] about the non-life rating environment and capital position, although we do not anticipate any comment on the dividend policy. The valuation of Aviva is still a reflection of concerns on the asset side of its balance sheet that are common across the sector. These are unlikely to go away anytime soon but assuming that the investment markets are not going to implode, we believe that the shares are attractive at these levels."

But British Airways fell 2.4p to 163.9p on concerns that its proposed merger with Spain's Iberia could be threatened by the current economic downturn. Both Iberia and German airline Lufthansa have made downbeat comments about trading. Collins Stewart issued a buy note on BA but warned:

"The merger with Iberia and American ATI [anti trust immunity] approval are key to transforming BA's economics; £400m of joint synergies are estimated from the Iberia deal alone. Without these deals, the outlook appears bleak with a very slow rebuilding of returns."

Hotel groups benefited from a positive note from Panmure Gordon. The broker began coverage of Intercontinental Hotels, up 38p to 672p, with a buy recommendation, saying:

"Although current trading is weak, we see the stock as a great way to play any US recovery given the 70% exposure to the region. Although new openings will slow in the short term, the group's 245,000 room pipeline positions it to deliver longer-term growth. Trading on a 30% discount to US peers, the stock looks materially undervalued."

It also advised clients to buy Whitbread, 51p better at 919.5p. It said:

"Whitbread's economy-focused Premier Inn business should continue to outperform operationally and the conservative balance sheet makes the stock a relatively safe haven in the sector. Recent trading is likely to be weak but we see good upside potential."

Lower down the market, traders noted some speculative interest in phosphate specialist Sunkar Resources, up 4.5p to 16p.

But Victoria Oil & Gas lost 0.78p to 3.9p after a Kazakh court ruled against it in the latest stage of a dispute about the ownership of the Kemerkol oil field in Kazakhstan.

Finally, Regent Inns, owner of the Walkabout bars and Jongleurs clubs, fell 33% to 1.55p as it said it was considering delisting its shares. Mark Brumby at Blue Oar Securities said:

"A delisting would allow Regent to restructure in private and, with its market capitalization as low as it is, under current listing rules most transactions will be Class A transactions and will involve the company and its shareholders in considerable expense."