THE banking sector and encouraging US growth figures lifted the FTSE 100 to close above 5,600 for the first time in two months.
HBOS and Barclays both made significant gains, climbing 9% and 8% respectively, while housebuilding stocks also performed well despite gloomy results from Taylor Wimpey.
Britain's largest housebuilder unveiled a £1.5bn loss in the first half of th
e year and wrote nearly £600m off the value of its land bank. But hints that it is on the cusp of securing a deal over its £1.7bn debt mountain saw its shares end 19% higher, while rivals Barratt Developments and Persimmon also performed well, closing up 8% and 4%.
The retail and leisure sector will steal the limelight with updates from HMV, pub group JD Wetherspoon and Premier Inn owner Whitbread.
HMV chief Simon Fox's three-year turnaround plan is expected to show further signs of progress when he updates the markets on Friday after a dismal couple of years for the retailer which has been hit by the online download revolution.
There were encouraging signs earlier this year when Fox posted a 25% increase in pre-tax profits to £56.6m for the year to April 26 after a shift in emphasis to the high-growth games market.
Analysts expect Fox to have built upon this momentum although they say Christmas will test his mettle.
Premier Inn hotels is once again expected to be the highlight of leisure group Whitbread's latest update on Thursday. Figures for the 24 weeks to August 15 are likely to show further progress on the double-digit sales growth recorded at the budget hotels chain in the 13 weeks to May 29.
In particular, they are expected to have been bolstered by an agreement in July to exchange assets with pubs and restaurant firm Mitchells & Butlers.
Premier Inn acquired an extra 21 hotels while Whitbread released 44 of its Beefeater and Brewers Fayre restaurants to M&B.
There are some concerns that Whitbread's Costa Coffee chain may be struggling in the consumer downturn but analysts expect further progress at Premier Inn to more than offset the difficulties elsewhere in the group.
Philippe Ronceau, analyst at Credit Suisse, said: "The UK budget hotel market is immature. We believe the leading UK operators, Premier Inn and Travelodge, are best positioned to consolidate the highly fragmented independent budget hotel market and increase market shares without risking overcapacity."
An update from Currys and PC World owner DSG International is expected to offer little comfort after it posted a 30% collapse in profits in June.
Big-ticket items such as washing machines, fridges and TVs have taken a heavy knock from the credit crunch, while DSG also faces online competition and the challenge of US electronics giant Best Buy's imminent entry into the UK market.
Analysts say former Tesco online chief John Browett – who took over in December – has a real job on his hands to breathe life back into the business.
Shore Capital analyst John Stevenson expects DSG's UK electricals division to report a "low single digit" decline in like-for-like sales, while computing is "unlikely to surprise on the up-side".
He warned: "We expect the consumer backdrop to deteriorate further… and see scope for further trading disappointment over the coming six months."
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