London shares close higher on US retail sales

London shares closed higher on Tuesday on stronger than expected US retail sales in the wake of better than expected German and French growth figures, traders said.

The benchmark FTSE 100 index ended the day up 32.90 points or 0.56 percent at 5,864.78.

"In recent days investors have grown used to sessions with little newsflow, but finally we have had something weightier to contend with today," said Rupert Osborne, futures dealer at IG Index.

"After dropping in June, US retail sales returned with a vengeance, up 0.8 percent in July, double the expected growth rate. This return to form by the American consumer sent a jolt of excitement through markets, helping them to extend their multi-day rally still further," he said.

Earlier the market was lifted by better-than-expected economic growth data for Germany and France, though gains were capped by news that the overall eurozone had contracted.

The German economy, Europe's biggest, beat analysts' expectations to grow by 0.3 percent in the second quarter, buoyed by rising exports and robust domestic demand, official data showed on Tuesday.

Analysts had been forecasting gross domestic product (GDP) expansion of just 0.2 percent for the period from April to June.

The French economy meanwhile registered zero growth in the second quarter, beating expectations it would begin a slide into recession amid the ongoing eurozone debt crisis.

Osborne said: "Corporate news is still relatively light, but Standard Life shot higher after an excellent performance from its UK division meant that the insurer enjoyed a good first-half performance."

The insurer soared 8.06 percent to 277.40 pence, making it the top riser by far in the FTSE 100.

Utilities stocks also rose, led by United Utiities, up 4.86 percent at 722.50 pence. Pennon Group climbed 4.21 percent to 766.50 pence and Severn Trent gained 3.40 percent to 1,766 pence.

Standard Chartered added 2.74 percent, continuing to recover from last week's plunge following accusations in New York that the bank carried out huge business with Iran in a way that was illegal in the US.

CRH sank 4.84 percent to 1,160 pence after the building materials group admitted in its interim results that it faces problems with its eurozone business.

"In Europe trading was adversely impacted by very severe weather conditions in February, and by deteriorating confidence as uncertainty continued regarding Eurozone economic issues," chief executive Myles Lee said.

On currency markets, sterling eased to $1.5683 at 5:25 pm from $1.5692 a day earlier, but edged up to 1.2721 euros from 1.2714 euros at the same time on Monday night.

Source: http://news.yahoo.com/london-shares-close-higher-us-retail-sales-163023176.html

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