Gains in Xstrata and Royal Dutch Shell stocks fuel Footsie rally

FTSE: 5,718.13 (+22.02) Mid-250: 11,345.82 (+109.43) Small Cap: 3,141.80 (+13.93): LONDON EQUITIES continued to rise yesterday, with sustained demand for resource stocks as traders continued to hope the market's recent losses left it oversold.

The FTSE 100 added 22 points to close at 5,718.13, a gain of 0.4 per cent after rising 98 points over the previous session, its first closing gain since the Japanese earthquake and the subsequent nuclear emergency at the Fukushima reactors.

Once again, riskier mining stocks rebounded on hopes that the threat posed to the evolving global economic recovery by the crisis in Japan was waning.

Xstrata, the Anglo-Swiss copper miner rose 0.3 per cent to £13.82½ .

Oil companies made an appearance too, with crude prices lifted by the prospect of a UN-backed military action in Libya to enforce a no-fly zone as the civil war in the north African oil exporter continued.

Brent crude futures rose 1.6 per cent to 116.70 a barrel. Shares in BP were 1 per cent higher at 462p. Royal Dutch Shell was 0.7 per cent stronger at £21.46.

Chris Weston, institutional trader at IG Markets said “suggestions that the Japanese nuclear crisis is showing some signs of stabilising, along with notes of support for the country’s economy from the G7, has provided a degree of stability for equity markets running into the weekend break. The major indices are all ticking higher as a result of this shift in sentiment, offering global equity markets some much needed relief and although the situation remains volatile, anything that instills confidence in the near term is likely to be well received,” he said.

There were also signs that the volatility seen during the week was continuing to ease. The FTSE 100 Volatility Index, fell 5 per cent.

Back in London, and after the strong gains on Thursday which lasted until the close of trade – unlike the rally on Wednesday when an early rally was wiped out – caution remained in the air yesterday, with the leaderboard featuring defensive as well as riskier stocks.

This was a sign that investors had one eye on protecting gains made on Thursday.

National Grid, an electricity distributor, was 4.4 per cent higher at 577p. United Utilities was 1.4 per cent up at 568½p. Severn Trent added 1.3 per cent to £14.20. – (Copyright The Financial Times Limited 2011)