FTSE starts the year with a bang – FTSE 100 up 2%

<p>The FTSE 100 started the year with a bang, with the UK’s benchmark Index rallying 2% in trading to lift the FTSE 100 back above […]</p>

The FTSE 100 started the year with a bang, with the UK’s benchmark Index rallying 2% in trading to lift the FTSE 100 back above the psychologically important 6000 mark. It’s a terrific way to start the year for UK traders with the three key heavyweight sectors; energy, banks and miners, all enjoying strong sector gains.

Whilst inevitably some may be drawn to the positive start as a signal of intent by investors for 2011, the FTSE is playing catch up to US and European markets which closed higher yesterday, and investors are buying back into the oversold falls suffered on Christmas Eve. Make no mistake however, it’s another strong start to the year for the UK markets.

The FTSE 100 has rallied an average of 1.3% on the first trading day of the year for the last 5 years and so today’s rally, whilst expected, is above average in terms of strength and will give investors a nice boost after the VAT hike came into affect today.

Wider European Indices are also higher with the DAX and CAC both rallying another 0.1% and 0.4% respectively having posted strong gains yesterday.

Much of today’s gains are weighted in strong performances in the FTSE 100’s three heavyweight sectors; energy, mining and bank firms. To a degree, much of the stronger price action in energy firms and miners are due to investors playing catch up to hefty gains in commodity prices yesterday.

Energy stocks have climbed well on the back of nymex crude oil hitting a new 2 year high yesterday of $92.58 per barrel. BP is one of the standout performers today with its share prices rallying almost 5% to hit a new 6 month high after the Daily Mail reported that rival Royal Dutch Shell mulled a bid for the embattled UK oil firm after the Gulf of Mexico oil disaster.

Copper prices hitting record highs yet again have also been a significant boost to demand for shares of mining companies, with Xstrata one of the standout performers in this sector.

We have also seen some speculative buys in Royal Bank of Scotland shares this morning as investors have been bulled by an upgrade in stance from BNP Paribas, who said that the recent falls in RBS’s shares represents a buying opportunity.

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