Increases in property, retail and tobacco sector shares make up for losses in financial and mining sectors
The FTSE 100 index edged closer to the 6000 mark as growth in property, retail and tobacco shares outweighed declines among the banks and miners.
The blue-chip index increased by 32.21 points, or 0.54%, to close at 5996.01, as a broadly positive note on the sector from JP Morgan boosted property stocks such as British Land, which rose by 17p, or 3%, to close at 569p and Land Securities, which increased by 15p, or 2%, to 753.5p.
Meanwhile, retailers benefited after John Lewis reported that weekly sales jumped by 7.3% to £52.3m and revenues at its Waitrose subsidiary soared by 24.5% to £99.6m over the same period. Next increased by 2%, while Marks & Spencer rose by 1%. Shares in Dixons Retail soared by 5.24%, as the City continued to celebrate Thursday's announcement that it was pulling out of Spain after 10 unhappy years.
Tobacco shares were give a boost after Goldman Sachs said the sector could be ripe for takeovers since it is inexpensive and under-leveraged. Imperial Tobacco and British American Tobacco were among the FTSE 100's biggest risers after Goldman pointed to the groups as likely participants should merger and acquisition activity return to the sector. Imperial rose 1.85% and BAT 1.32%.
Biggest riser in the FTSE 100, however, came from another industry, as Man Group, the hedge fund, jumped by 10.2p, or 4.24%, to 250.6p on the back of a recommendation from Bank of America Merrill Lynch.
Bank shares fell amid weakening sentiment for the sector, after Moody's cut Ireland's sovereign rating by two notches to the verge of junk status and kept its outlook negative. Royal Bank of Scotland fell by 1.98%, while Barclays and Lloyds Banking Group both declined by 0.5%.
"We are seeing continual pressure on banking stocks and it's difficult for the market really to make any gains when the headlines are full of rising bond yields, downgrades to sovereign debt ratings, and the increasing likelihood of default," said Angus Campbell, head of sales at Capital Spreads.
Miners fell after China revealed that, despite repeated attempts to tackle inflation, consumer prices leapt by 5.4% in March, fuelling concerns that the government may need to raise interest rates to slow down the fast-growing economy and prevent it from overheating. Vedanta Resources fell by 1.03% and Rio Tinto by 0.78%.
In the FTSE 250, Ladbrokes was the biggest riser, jumping by 9.4p, or 6.97%, to end the day at 144.3p, after the betting chain said merger talks with online rival 888 had fallen through because they could not agree a price, while revealing good sales figures for the first quarter. The company added that net revenues increased by 2.3% in the first three months of the year and operating profit rose by 1.9%.
Continuing a volley of announcements, Ladbrokes announced it had lured Greene King finance director Ian Bull to be its chief financial officer. Deutsche Bank analysts upgraded their recommendation on Ladbrokes' shares from hold to buy. Its encouraging results appeared to lift sentiment in the betting industry, pushing up shares of William Hill 5.6% to 196.3p.