Barclays and Lloyds Banking stocks help keep Footsie in positive territory

FTSE: 5,904.49 (+3.73) Mid-250: 11,639.39 (+8.08) Small-Cap: 3,258.54 (+20.50)LONDON EQUITIES inched higher yesterday, as demand for financial stocks survived a wider trend for waning risk appetite to keep the FTSE 100 positive.

As traders seemed uncertain about the market’s immediate prospects after the previous week’s strong gains, banks continued to look like good value after upbeat broker comment on the sector helped it underpin the index’s modest advance.

In a separate piece of analysis, JP Morgan said the degree of systemic risk faced by the sector after the financial crisis had eased, leading the broker to repeat its “overweight” rating on the sector.

Barclays rose 0.8 per cent to 292.3p. HSBC was 0.9 per cent higher at 653.6p. London’s two part-nationalised lenders did not match the extent of the sector’s best gains. Lloyds Banking added 0.9 per cent to 60.58p. Royal Bank of Scotland was 0.6 per cent stronger at 42.4p.

Overall the FTSE 100 was 4 points higher to 5,904.49, a rise of 0.1 per cent. It came after a 3.2 per cent advance over the previous trading week.

By Monday, the recovery had taken the benchmark index back above the 5,900-points level it had held before the Japanese earthquake sparked heavy selling across global markets. But there were lingering warnings that the fate of the recovery remained vulnerable to tensions in Libya and the Middle East as well as a continuing lack of clarity about the state of the Fukushima reactors in Japan.

“Equity markets are starting the week in something of a mixed mood as the two key ongoing geopolitical stories remain front-of-mind for many,” warned Ben Potter, research analyst at IG Markets.

“Despite this, both gold and oil prices remain in check so this could at least suggest that we won’t see any quick flight to safety by investors, although it does seem likely that confidence will remain somewhat lacking in the shorter term,” he said.

With sentiment looking uncertain, the make-up of the list of the FTSE 100’s biggest risers was also delicately poised, featuring higher-risk resource companies as well as the defensive stocks more typically in demand during overall selling.

Cairn Energy rose 1.7 per cent to 455.4p after analysts at UBS raised their rating on the stock from “neutral” to “buy”. – (Copyright The Financial Times Limited 2011)