Sterling rises as copper prices stumble to three-week lows

The banking sector kept the FTSE 100 Index out of the red yesterday and offset falls from heavily-weighted miners.

The Footsie closed 2.1 points higher at 6087.4 after struggling to make headway throughout the session.

It was a similar picture on Wall Street as investor confidence was shaken by worse-than-expected US inflation and unemployment data and emerging political unrest in Libya, Bahrain and Iran.

The US Labour department reported a higher-than-expected increase in unemployment claims last week and inflation increased on a monthly basis at an above forecast 0.4 per cent in January.

In London, miners also weighed the market down as copper prices stumbled to three-week lows, with Anglo-Swiss firm Xstrata down three per cent or 37p at 1440p, while copper miner Kazakhmys was not far behind, dropping 33p at 1505p.

The pound was boosted by a hawkish speech from Bank of England policymaker Andrew Sentance, who stepped up his case in favour of an interest rate hike. Sterling rose to $1.61 and €1.18.

In corporate news, BAE Systems sank to the bottom of the FTSE 100, losing four per cent or 14.8p at 340.9p, after the defence giant warned sales were likely to fall in 2011.

Shares in B&Q parent Kingfisher dropped 0.8p to 256.5p despite forecasting a 20 per cent rise in annual profits.

The group said strong international growth helped to offset continued tough trading in the UK as full-year profits are expected to be at the top end of analysts’ expectations.

Banks littered the risers’ board as confidence in the sector was boosted by upbeat earnings from Barclays and French giant Société Générale.

Royal Bank of Scotland led the sector, adding 1.8p to 49p, while Lloyds was not far behind, up 1.98p at 69.2p.

Barclays was also on the rise, up 1.6p at 333.6p, while HSBC climbed 9.4p to 730.9p.

It is the third session in which banks have outperformed the market after Barclays announced a 32 per cent rise in pre-tax profits to £6.1 billion on Tuesday.

Outside the top flight, Ladbrokes’ shares dropped 2.5p to 139.5p after the UK’s biggest bookmaker reported a 20 per cent jump in annual profits.

Meanwhile, Sports Direct fell 1.8p at 165.8p despite confirming it will meet its profits target of £205 million, triggering a £10.8 million pay-out for more than 2,000 staff.

Homebuilder Redrow returned to first-half profits for the first time since 2007 and said reservations in the first six weeks of 2011 were comfortably ahead of last year.

While its shares failed to receive a boost – down 2.3p to 130.7 – the wider market moved ahead with Taylor Wimpey up 1.6p at 38.6p, Bovis ahead 7.5p at 444.6p and Persimmon adding 5.1p at 439.1p.

The biggest Footsie risers were Autonomy up 69p at 1703p, Lloyds Banking Group ahead 1.98p at 69.2p, Resolution up 13.9p at 294.5p and African Barrick Gold up 18.5p at 550.5p.

The biggest Footsie fallers were BAE Systems down 14.8p at 340.9p, Xstrata off 37p at 1440p, Tullow Oil down 39p at 1370p and Vedanta Resources off 45p at 2400p.