Britain’s FTSE on track for biggest weekly gain in two years

Britain’s top equity index was on track for its biggest weekly gain in two years on Friday, led by recent laggards such as insurer Aviva and media group WPP , as analysts recommended snapping up battered shares after a recent sell-off.

Barclays, which had fallen 11.6 per cent in just over a week, rose 1.4 per cent after the judge overseeing New York state's lawsuit accusing it of fraud in its alternative trading system raised questions about the case.

At 0904 GMT, the broader FTSE 100 index was up 0.8 per cent at 6,515.04 points, adding to a 2 per cent rise on the previous day and setting it on course for a 3.4 per cent increase for the week, the biggest since November 2012.

Global equities have been rallying since the Federal Reserve Chair Janet Yellen had said on Wednesday that the US interest rates were unlikely to rise for “at least a couple of meetings’’, meaning April at the earliest.

Before this bounce, the FTSE had fallen nearly 9 per cent in 1-1/2 weeks, as a slide in commodity prices hit energy and mining stocks and concerns about Russia’s financial stability cast a shadow on emerging market economies.

“When these turns happen quickly, there’s fear of missing out,’’ Ian Williams, a strategist at Peel Hunt, said.

“It may be that we need the dust to settle and people to reconsider things in January before we get a real idea of whether this rally is sustainable.’’

Bernstein branded insurer Aviva “a last minute Christmas bargain’’ and upgraded the stock to outperform from neutral after a 15 per cent fall in the stock since the announcement of a deal to buy Friends Life in November.

Aviva’s shares rose 1.4 per cent on Friday.

“We believe the recent sell-off provides an attractive entry-point into the stock, even for those — like us — who are only prepared to value the synergies and cash return,’’ the analysts wrote in a note.

Shares in WPP rose 2.9 per cent to the top of the FTSE as Citi raised its recommendation on the stock to buy from neutral after an 8 per cent fall since early December.

“Valuation now stands at almost a 5-year low vs. the market,’’ Citi’s analysts wrote. “We continue to have concerns about the agency model, but think risk/reward for WPP looks positive.’’

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