Traders shrugged off a dowbeat report on UK manufacturing to push the FTSE 100 Index higher on Monday.
Output fell for the fourth quarter in a row to the lowest since the third quarter of 2009, according to the study by the Engineering Employers Federation (EEF) and law firm DLA Piper.
Basic metals and electricals led the falls as the steel industry took a hit in the UK, but the automotive and chemical sectors were still positive on output.
The export picture deteriorated further, with less optimism about European markets and almost 60% of those surveyed citing no improvement in demand in any main market.
The domestic situation became less supportive, with UK orders racking up another negative quarter. Confidence about the UK economic outlook in the next year also took a knock.
But dealers took their cue from Asian markets, which got an overnight boost from solid US job data on Friday, with Japan’s Nikkei up just under 1%.
The Footsie rose 30.9 points to 6269.19 while the Cac-40 in Paris lifted 42 points and the Dax in Frankfurt gained 142 points.
In the markets, oil and energy stocks lost ground after Middle East oil cartel Opec failed to cut output at a meeting on Friday.
BP (LON:BP.) fell 7.2p or 2% to 352.5p and Royal Dutch Shell (LON:RDSB) shed 25.5p or 1.6% to 1574p. Cairn Energy (LON:CNE) backtracked 2.9p to 141p.
Medical group Collagen Solutions (LON:COS) was 0.12p healthier at 9.25p after announcing a deal to supply BBI Solutions with medical grade collagen.
Life science firm Optibiotix Health (LON:OPTI) dropped 1.5p to 77p on news of a £1.5mln fundraising.
Allergy Therapeutics (LON:AGY) ticked up 0.38p to 32.5p as the hay fever specialist enrolled its first patients in a US phase II trial of grass allergic rhinitis product GMM.
MARKET PREVIEW
The FTSE 100 is set to open its weekly account in positive territory, taking its cue from Asia’s main markets overnight.
The region’s markets were buoyed by some solid jobs data from the US on Friday, with Japan’s Nikkei up just under 1% and the Hang Seng ahead 0.25%.
The Shanghai Composite marked time ahead of a busy week for China with data on trade, consumer and producer sentiment, industrial production and retail sales expected.
It is fair to say by the end of week we will have a better a good idea to the health or otherwise of the world’s second largest economy.
The most notable market movement was that of oil, with US crude darting below the US$40 a barrel mark (it hit US$39.51) before staging a mini recovery. Brent hovered around US$43 a barrel.
OPEC’s decision on Friday to leave the spigots open acted as the depressant, with the Saudi-led cartel showing no signs of folding in this high stakes game of poker.
Against this backdrop, the market analysts expect UK quoted oilers and oil service firms to be in reverse gear.
Even so, the spread betting firms still see the FTSE 100 advancing around 46 points to 6,284.29 at the open.
Looking to the week ahead, the Bank of England begins its two-day meeting on Wednesday, but is unlikely to rock the boat by keeping UK base rates on hold at 0.5%.
On the corporate front it looks to be a very quiet week with Costa Coffee owner Whitbread and online grocer Ocado the pick of the bunch.
Other markets
Gold – 30 cents lower at US$1,084.20.
Currency – the pound is worth US$1.51.