FTSE rallies in choppy trade after successful Portuguese bond auction

The FTSE posted gains for a second day in a row with banks providing much of the energy behind the gains after a successful Portuguese bond auction settled investor nerves concerning sovereign debt and speculation that banks were courting suitors for government stakes.

Near 3% gains on the day for the banking sector in London alongside 1.8% gains for the mining sector paints a picture of healthy appetite for risk amongst investors. The latter of those two sectors, the miners, has benefiting particularly from gains in the price of Copper and positive broker action at Deutsche Bank, who upgraded their views onKazakhmys and Vedanta Resources.

It’s another positive day for the markets with the FTSE 100 attempting to pull away yet struggling to break resistance at the 6050 level.

There has been a notable step in the right direction for a calming of nerves concerning the European Sovereign debt situation today with investors bulled by a successful Portuguese bond auction and hopes that the emergency EU liquidity fund may be propped up.

With the Spanish Ibex and Italian Mib Indices both posting gains of 4% and 3% respectively today, this can be seen as an important confidence boost from investors that their sovereign debt fears could be waning. That said, investors are likely to want to see affirmative action from the EU first and this means we are still some way from being able to draw a line through this issue just yet.

All eyes will now be on Spain’s bond auction tomorrow to see if they can create a similarly confident stock market response. Both Spanish and Italian Indices slumped 16% and 12% respectively last year.