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FTSE 100 rallies on German business confidence data

Last updated: 08:26 24 Nov 2011 EST, First published: 09:26 24 Nov 2011 EST

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The FTSE 100 is poised to snap its longest losing streak in nearly nine years after tacking on 28 points (0.55 percent) to reach 5,168 in early afternoon as the market cheered today’s upbeat German data.

Investors decided to move money back into the stock market after today’s reading of the German Ifo business climate index came in ahead of projections, showing an increase from 106.4 in October to 106.6 this month, while expectations were for a decline.

The data partly offset the negative impact of yesterday’s disastrous auction of German bunds. The euro zone’s largest economy and the main provider of financial aid for struggling European countries offered €6 billion in ten year bonds, but received bids for just €3.9 billion.

“We tend to think that if Germany is truly worried that yesterday’s failed auction is a sign of a buyers strike then it may finally bow to pressure to allow the ECB to step in to provide a “buyer of last resort” role,” said analyst at forex.com Kathleen Brooks.

In addition, stocks received support from speculation that Germany’s ruling coalition is softening its stance on the idea of issuing common euro zone bonds. Chancellor Angela Merkel has previously called the idea of introducing common euro area bonds “inappropriate”.

In the UK, the Office for National Statistics today confirmed its UK GDP growth estimate of 0.5 percent for the third quarter compared to growth at an annualised rate of just 0.1 percent in the previous three months.

Trading volumes were low as US markets were closed for the Thanksgiving Day holiday.

Mining major Vedanta Resources (LON:VED, up 5.4pct at 979p) emerged as the top riser in the FTSE 100 this afternoon after rating agency Fitch assigned a long term rating of A-(ind) with a stable outlook to its subsidiary Vedanta Aluminium.

Banks Barclays (LON:BARC, up 4.3pct at 154.25p) and Lloyds (LON:LLOY, up 4.3pct at 22.77p) also did well as concerns over their exposure to the European debt crisis eased following a decline in euro zone bond yields.

Other notable risers included interdealer broker ICAP (LON:IAP, up 4.9pct at 326.9p) and engineering firms IMI (LON:IMI, 4.2pct at 710p) and GKN (LON:GKN, up 3.9pct at 172.8p).

Food processing company Tate & Lyle (LON:TATE, down 1.3pct at 660p) and National Grid (LON:NG., down 1.3pct at 624p) went against the tide today, sliding to the bottom of the FTSE 100 pile.

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