After a subdued start, UK shares bounced back in midday trade, encouraged by positive economic data from the UK – where the British Chambers of Commerce’s quarterly survey pointed to a continued pick-up in the country’s economy.
There was also good news coming from Europe, where the German jobless rate has declined for the first time in five months in December.
The improving economic picture led banks to rally, helping send the FTSE 100 32 points higher to 6,762 – shares in Lloyds Banking Group (LON:LLOY), Old Mutual (LON:OML), HSBC (LON:HSBA) topped the gainers’ board on the blue chip index.
However, water companies sank to the bottom of the pile after JP Morgan said it sees M&As in the sector this year as “unlikely” given the degree of regulatory risk after Ofwat’s decision to change the price review timetable, not due now until December this year.
The US broker downgraded its rating on Severn Trent (LON:SVT) to ‘underweight’ from ‘neutral’, which weighed on the shares, down nearly 3% to 1,657.
Meanwhile utilities giant Centrica (LON:CNA) was still reeling from the news that its Group Finance Director, Nick Luff, will be leaving the owner of British Gas to join Reed Elsevier (LON:REL) and shed 1.3% to 338p.
Among mid caps, engineering solutions provider Costain (LON:COST) remained in good shape after revealing its order book had soared 25% by the end of the year: in excess of £750mln of work has been secured for 2014.
Shares added nearly 5% to 296p.
Elsewhere, Synety Group (LON:SNTY) continued to soar after the company revealed its telephone solutions are gaining real traction in call centres.
The company, which is behind the CloudCall services, said recurring revenues and the number of active licences were up around six-fold last year to £850,000 and 5,145 respectively, while the number of users jumped by five times to 2,678.
Shares gained over 33% to 214p.
Condor Gold’s (LON:CNR) investors welcomed news its La India project in Nicaragua would be viable at much lower gold prices – shares rose 13% to 74.15p.
Technical analysis, which accompanied an updated resource estimate in November last year, showed the possibility of “high grading” the La India open pit part of the project in the event of lower gold prices and operating at reduced cash costs.
Broker VSA Capital said the Condor statement demonstrated the "robust" nature of the group's pit models.
Motive Television (LON:MTV) meanwhile continued to witness strong volumes with 1.4bn changing hands in early afternoon trade compared to the daily average of 250mln.
Shares gained over 13% to 0.0235p.