The FTSE 100 added 0.75% during the week as positive data from the US outweighed Chinese concerns and worries over the European debt crisis, which still had equity markets on both sides of the Atlantic under pressure.
The UK’s blue chip index added 0.6% on Friday with oil and gas supermajor BP (LON:BP) leading the way with a 7% rally. Telecom company Cable & Wireless Worldwide (LON:CW) and oil and gas producer Tullow Oil (LON:TLW) followed with gains of 4.5% and 3.7% respectively. BT (LON:BT.A) and London Stock Exchange Group (LON:LSE) added 3%. Pharmaceutical company GlaxoSmithKline (LON:GSK) and oil and gas companies BG Group (LON:BG) and Cairn Energy (LON:CNE) all tacked on more than 2.5%. Home Retail Group (LON:HOME) and Reed Elsevier (LON:REL) followed, advancing 2.4% and 2.3% respectively.
Temporary power provider Aggreko (LON:AGK) slid to the bottom of the pile with a 4% loss. Part-nationalised bank Lloyds (LON:LLOY) and insurer Prudential (LON:PRU) lost more than 2.5%. Another bank Standard Chartered (LON:STAN) and engineering group Invensys (LON:ISYS) declined 2%, while retailer Tesco (LON:TSCO), Royal Bank 0f Scotland (LON:RBS) and base metal miner Antofagasta (LON:ANTO) slid 1.8%.
US markets switched back to buying mode after the University of Michigan consumer sentiment index was shown to have risen to its highest in more than two years at 75.5. This seemed to offset a 1.2% decline in US retail sales in May. US jobless claims data was positive, showing that continuing jobless claims hit 17 month lows after declining by 255,000 last week. However, initial claims fell by 3,000, which was a lesser decline than expected.
Mixed data came out of China, whose National Bureau of Statistics said that the growth of the country’s industrial output slowed from 17.8% in April to 16.5% in May to weaken the outlook for the Chinese crude demand. China had previously said that its exports soared by nearly 50% in May.
Chinese inflation was shown to have risen to an annualised 3.1% in May, eclipsing the government’s annual target of 3% and leading to speculation the China could soon introduce additional monetary policy tightening measures.
Europe’s debt situation also was a concern after Hungary’s new government said its budget deficit was worse than previously thought and the country could soon find itself in the same situation as Greece, which barely avoided bankruptcy, having to resort to a €110 billion bailout package from the European Union and the International Monetary Fund (NYSE:IMF). No attempts to downplay the severity of the situation by Hungary worked, while a failed debt auction only added to the jitters.
The strong US data added positivity to the markets and was further strengthened by the Fed’s Beige Book survey of regional economic conditions that was presented on Wednesday and showed growth in all of Federal Reserve’s 12 districts, which last occurred in late 2007. Fed Chairman Ben Bernanke said earlier in the week that the US economy would not go through a double-dip recession.
The FTSE 100 is currently projected to add 0.5% in early trade on Monday, while the Dow Jones index is seen 0.1% lower.