The FTSE 100 closed higher on Friday as mining and energy shares rallied. Energy stocks benefited from a jump in oil prices while heavily-weighted miners bounced back from losses the previous day, despite weaker copper prices. The price of oil climbed due to hopes of an output deal from the big producers.
Anglo American, BHP Billiton, Rio Tinto, Shell and BP were all trading firmly in positive teritory.
Oil prices gained on optimism about the US economy after Federal Reserve Chair Janet Yellen offered an upbeat view. Brent crude surged 5.5% to $41.75 per barrel.
Speaking at a panel before former Fed Chairs Ben Bernanke, Paul Volcker and Alan Greenspan at the International House in New York on Thursday, Yellen touted the strength of the labour market and rebuffed suggestions that an economic bubble is about to burst.
“I certainly wouldn’t describe this as a bubble economy,” Yellen said, responding to Republican presidential contender Donald Trump’s claims.
“The US economy has continued to progress in a satisfactory way. We continue to see good job performance, some evidence of inflation moving up, so that was our expectation when we raised rates in December.”
Closer to home, investors shrugged off disappointing UK data.
The Office for National Statistics said Britain’s trade deficit in goods narrowed in February to £12bn after January’s reading was revised sharply higher to £12.2bn. However, February’s reading was higher than economists’ forecasts for it to narrow to £10.2bn.
Meanwhile, UK industrial production unexpectedly declined in February by 0.3% month-on-month following a revised 0.2% increase in January, the ONS revealed.
“February’s trade and industrial production figures add to the evidence that the economy has made an uninspiring start to the year and suggest that growth remains heavily unbalanced,” according to Capital Economics.
Manufacturing production dropped 1.1% in February, more than the 0.2% dip expected by analysts and following a revised 0.5% rise in January.
Chancellor George Osborne will have been expecting a slight drop in today’s manufacturing production figures, especially amid the furore of steel giant Tata signaling their intention to close their Port Talbot plant, but the severity of the fall will have been surprising.
The NIESR has estimated the UK economy grew by 0.3% in the first quarter of 2016 after growth of 0.2% in the three months ending in February 2016. It marked the weakest rate of growth for the UK economy since the final quarter of 2012.
“The subdued growth in the first quarter of 2016 has been primarily driven by weakness in production industries, especially manufacturing,” according to James Warren, research fellow at NIESR.
In the US, the Commerce Department said US wholesale inventories fell 0.5% in February, the sharpest decline since May 2013. Analysts had expected a 0.1% drop.