FTSE 100 ends the week 4.2pc higher

By Ben Harrington, Markets Reporter Published: 6:30PM GMT 19 Feb 2010

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On Friday, Anders Nielsen, equity strategist at Goldman Sachs, noted that since he published his 2010 forecasts in December "some investors have raised concerns that these numbers are too optimistic".

So, Mr Nielsen felt obliged to "reiterate" his belief that the European market will see 38pc corporate earnings growth in 2010 and 28pc in 2011. This is because companies" "exposure to growth abroad will drive a recovery in earnings in line with that experienced coming out of past recessions".

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The blue-chip index gained 33.08 points to 5358.17 during Friday"s session. Elsewhere, the FTSE 250 put on 46.09 points to 9431.36.

Shire leapt to the top of the leaderboard after its full-year results beat market expectations. Dealers were surprised the company reported a rise in fourth-quarter profit, helped by higher sales of Vyvanse, its drug treating attention deficit and hyperactivity disorder (ADHD). Meanwhile, Shire"s division that produces drugs for rare genetic diseases benefited from problems at rival Genzyme. Shire"s shares hit a nine-year high, rising 60p to £13.70.

Banks continued to be in demand on renewed talk investors are switching out of European rivals and into British banks. Royal Bank of Scotland edged 0.7 higher to 34p and Barclays rose 3.9 to 312p as Evolution raised its price target to 482p from 448p.

BT Group, which was heavily sold off on Thursday, rallied 2.8 to 118.6p following positive comments from Fitch, the ratings agency. Although Fitch said BT"s £9bn pension deficit is "undoubtedly a negative factor for group deleveraging", the pension deficit payments can be absorbed by the group"s operational cashflow in the short to medium term.

Traders, though, took defensive positions after a strong week for the riskier stocks. Imperial Tobacco perked up 45p to £20.80 and National Grid rose 13 to 650p.

Mining companies were the laggards as the dollar strengthened following the Federal Reserve"s decision to increase the discount rate for banks. Precious metal producers fared the worst. For example, Mexican silver miner Fresnillo lost 11 to 774p and gold specialist Randgold Resources shed 66p to £46.99.

However, Cluff Gold, the Aim-listed gold mining company, bucked the trend after it confirmed it had received an approach from a potential bidder. Randgold is rumoured to be the purchaser. Cluff surged 9 to 71p.

Among the base metal produders, Vedanta Resources slipped 6p to £25.54 despite an upgrade to "overweight" from HSBC. "Vedanta offers the highest growth potential in our universe, which in our view is not yet reflected in valuation," said Thorsten Zimmermann, analyst at HSBC.

On the mid-tier, Morgan Crucible bounced 16.8 to 186.3p on the back of a "buy" note from Goldman Sachs. "We believe the company is well positioned to benefit from a cyclical recovery in its end markets and that concerns over the outlook for [its subsidiary] NP Aerospace are more than discounted in the current share price," said Tim Rothery, analyst at Goldman Sachs.

In the leisure sector, Millenium & Copthorne Hotels jumped 41.2 10.9pc to 417p after its fourth-quarter profits beat expectations.

On a more speculative tack, bid talk lifted Connaught, the property services company, 8.2 to 326.1p.

However, VT Group slipped 11 to 648p as analysts began to rule out the possibility of the prospect of a counter-bid.