2010 has kicked off on a positive note, with upbeat Chinese and domestic manufacturing data, deal news, and further broker upgrades propelling the London equities higher this morning.
The impression for 2010 is looking reassuring, with official figures released this morning continuing to support the global economic recovery story.
Investors cheered today after China's Purchasing Managers' Index (PMI) for the manufacturing sector rose to a seasonally-adjusted 56.1 in December, from 55.7 the previous month. Separately, a domestic report revealed that in December the UK manufacturing sector expanded at the fastest rate in over two years, as the UK manufacturing PMI climbed to 54.1 last month from 51.8 in November.
Deal news has also stimulated market sentiment. Swiss food group Nestlé announced that it was selling a majority stake in its eye-care unit Alcon to Swiss pharmaceuticals giant Novartis for $28.1 billion. Meanwhile, Cadbury remained at the centre of takeover discussions, with the market speculating that Kraft is mulling over a sweetened offer for the British company.
By 10.30am (London time) the FTSE 100 Index was trading 34.33 points (+0.63%) higher at 5447.21, while the broader FTSE 250 Index was at 9419.36, 112.47 points (+1.21%) above its previous close.
Banks added the most points to the blue-chip index this morning, with Lloyds Banking Group and Royal Bank of Scotland the sector's best performers after the Sunday Times reported that Itaú Unibanco, Brazil's largest bank, is looking at purchasing shares in one of the two British banks.
In the meantime, Royal Bank of Scotland announced that the sale of its RBS Pakistan subsidiary to MCB Bank did not go through, as regulatory approvals were not obtained before the deadline.
'The necessary Regulatory approvals were not obtained, and closing did not occur, by 31 December 2009, and accordingly the agreement and the Transaction have now lapsed', RBS announced in a statement on the London Stock Exchange.
The bank was also supported by a upgrade from Exane BNP Paribas. The broker upped its rating on RBS from 'neutral' to 'outperform'.
Shares of Lloyds Banking Group advanced 2.2% to 51.81p while RBS climbed 4.8% to 30.60p. In the meantime, Barclays, HSBC and Standard Chartered traded between 0.8% and 1.3% higher.
Miners also dominated the FTSE leaderboard after high-grade copper rose 2% to a 16-month high of $3.4135 per pound. Eurasian, Vedanta Resources and Lonmin were the three best performers, up between 2% and 3.2%.
Oil and gas producers made strong gains as well, after February light sweet crude climbed to $81 a barrel. Cairn Energy was by far the sector's best performing stock, rallying 5.3% to 350.2p after unveiling that it has secured a second drilling rig for its exploration programme in the Disko West area offshore from Western Greenland.
Cairn Energy was also supported by an upgrade from Bank of America Merrill Lynch, which raised the company's net asset value by 27p to 385p. The broker also issued an upbeat note on European miners.
BG Group was the second best performing energy major so far, up 1.4% to 1138p, with third-place BP gaining 1.1% to 606.6p.
Looking ahead, investors should keep an eye out for the US construction spending and ISM manufacturing data. These figures are scheduled for release at 3pm (London time) today.
