Barclays profit surge lifts London market into black

Barclays set the pace on the London market yesterday as it kicked off the UK bank reporting season with a bumper profits haul.

The banking giant saw its shares rise 7 per cent after it reported annual profits of 11.6bn, smashing City expectations.

Soaring sentiment took hold of the wider market and the FTSE 100 Index closed 76.59 points higher at 5244.06 a rise of 1.5 per cent.

World markets rose as investors looked beyond recent fears over the future of the debt-laden Greek economy.

Asian stocks were modestly higher overnight, while European markets were on the front foot as EU finance ministers warned Greece to remove the risk of jeopardising the euro area.

The euro, battered to a nine-month low last week as Greece's problems undermined confidence in the common currency, gained against the dollar.

The pound fell against the euro, but gained against the US dollar and 1 was worth 1.14 euros and 1.57 dollars.

Wall Street – which was closed on Monday for the Presidents Day holiday – was up 1 per cent amid buoyant trading and better-than-expected earnings for companies including new Cadbury owner Kraft Foods.

Oil futures gained $2.77 at $76.90, boosting shares of US energy companies, including Chevron, up 2.3 per cent at $72.62.

Shares of Merck & Co gained 2 per cent to $37.65 after the drugmaker posted quarterly profit in line with analysts' estimates and stuck by its goals for massive savings from its recently completed merger with rival Schering-Plough Corp.

More than 70 per cent of US companies reporting fourth-quarter results so far have beaten earnings estimates.

In London, news that inflation hit 3.5 per cent in January failed to shake the positive mood as such a level had been widely anticipated.

Anthony Grech, market strategist at IG Index, said investors would focus on UK unemployment figures today and the minutes from the latest Bank of England interest rate decision.

"There's no escaping from the fact however that the FTSE is set to post its sixth day of gains and the malaise with which it started the year is becoming a distant memory," he said.

Barclays topped the risers' board – adding 183/4p to close at 2933/4p – after trading was fuelled by the growth of its investment banking arm.

Rivals Royal Bank of Scotland and Lloyds Banking Group lifted 15/8p to 331/4p and 21/4p to 49p respectively ahead of their own figures next week.

Commodities stocks were also in focus as oil prices rose above 75 US dollars a barrel.

Miners were on the front foot as Vedanta Resources cheered 5 per cent – or 123p to 2490p – Randgold Resources added 183p to 4693p and Eurasian Natural Resources lifted 361/2p to 9661/2p.

In other corporate results, Mr Kipling and Hovis owner Premier Foods rose 3 per cent after it returned to the black with a bottom-line profit of 47m.

Chief executive Robert Schofield said the company had achieved a "tremendous amount" in 2009 as he mapped out targets for growth over the next three years.

Shares responded with a rise of 11/8p to 333/8p.

But Domino's Pizza UK & Ireland dropped 0.7p to 327p despite reporting profits up 27.8 per cent to 29.9m and that 2010 had started well.

Domino's warned it remained cautious given the uncertain economic climate.

The biggest Footsie risers were Barclays, RBS, Vedanta Resources and Lloyds Banking Group.

The biggest Footsie faller was Intercontinental Hotels down 27p to 893p.