Randgold Resources underperformed last night, falling back despite strong gains in the wider market, which advanced as bargain hunters moved in to capitalise on recent losses.
The gold producer was 14p behind at 3,685p as investors regained their appetite for risk, cutting back on their exposure to the safe-haven metal as they bought into retailers, banks and the heavily weighted miners.
The shift in sentiment pushed the FTSE 100 higher by 4.3 per cent, or 163.2 points, to 3,926.1. Traders took their cue from some better-than-expected corporate news and an uptick in the price of leading industrial metals. The session neatly rounded off the benchmark's best month since 2003, with the index gaining more than 8 per cent since the beginning of March.
Marks & Spencer was among the strongest, gaining almost 12 per cent, or 31.5p, to 296p after posting a fourth-quarter sales update. The figures confounded the bears, who had built up a sizeable short position in anticipation of a sharp drop-off in sales. Better-than-feared numbers sparked a squeeze as hedge funds scurried to abandon their downside bets.
The news lifted the wider sector. J Sainsbury, which gained 5.75p to 313p, was among the beneficiaries of the turn in sentiment. The supermarket's stock firmed despite Cazenove placing about 27 million shares at 305-310p, according to traders.
The shares are believed to be part of the remnants of the stake acquired by Kaupthing when it called in a loan owed by the entrepreneur Robert Tchenguiz.
Kazakhmys, up 11.6 per cent, or 38.5p, at 371p, led the miners higher as copper prices rose. Xstrata gained 9.8 per cent, or 41.75p, to 466.75p and Anglo American climbed to 1,186p, up 9.7 per cent, or 105p.
The improved mood helped the depressed financial issues, which suffered bruising losses on Monday. Old Mutual was the strongest here, rising by 13.3 per cent, or 6.1p, to 51.9p as traders sought bargains. Fellow insurer Prudential was also strong, gaining close to 10 per cent, or 30p, to 337p.
Among the banks, Lloyds Banking Group advanced to 70.7p, up 9.1 per cent, or 5.9p, and Standard Chartered gained 8.5 per cent, or 68.5p, to 866.5p.
Barclays, which named CVC Partners as the preferred bidder for its iShares asset management business, was less successful, losing 1.1p to 148p. Traders attributed the weakness to lingering concerns about the bank's decision to shun the Government's asset protection scheme. Panmure Gordon, which weighed in on the issue, said that by not participating in the scheme, the bank had left itself exposed to risks that accompany higher rates of corporate defaults. On the prospective sale of iShares, the broker said that although a disposal would boost capital, "it would also dilute the remaining group's returns on invested capital".
"This would also raise questions about earnings sustainability, because the group would become even more dependent on [earnings from Barclays Capital, the investment banking arm]," Panmure added, reiterating its "sell" stance on the stock.
BAE Systems jumped to 334.5p, up 3.5 per cent, or 11.5p, after Nomura issued a "buy" note on the aerospace and defence group's stock, saying: "While we acknowledge that the global financial crisis, which has resulted in sharply increased budget deficit forecasts, puts medium-term downward pressure on defence spending, we believe [spending levels] will prove more resilient than the market anticipates."
Elsewhere, the FTSE 250 gained 2.4 per cent, or 149.6 points, to 6,373.8. Enterprise Inns was the strongest of the mid-caps, rising by almost 20 per cent, or 11.25p, to 67.75p after posting a reassuring trading update. As with Marks & Spencer, the pub group's statement was said to have sent short-sellers fleeing, which added extra strength to the share price.
Housebuilders, including Redrow, which gained 6.8 per cent, or 9p, to 140p, and Barratt Developments, which advanced to 88.75p, up 4.4 per cent, or 3.75p, were lifted by in-line interim results from Bellway, which was 4.4 per cent, or 29p, heavier at 677.5p.
GKN, up 5.4 per cent, or 3.5p, at 68.25p, was boosted by Goldman Sachs, which reiterated its "conviction buy" stance, saying that concerns about the strength of the company's balance sheet had been "overplayed". "We forecast that GKN's automotive businesses will return to profit in 2010, and that the group will be free cash flow positive," the broker said, adding: "Current market concerns about GKN's liquidity and potential rights issue risk are unfounded."
Bunzl, the specialist distribution group, was also lifted by some positive broker comment. Numis commenced coverage, telling clients that the stock should "trade at a premium to the market". The broker added: "The majority of goods handled by Bunzl are essential type items and although demand [for these items] is linked to GDP movements, they are less sensitive than other products." It set a "buy" recommendation on the stock, which gained 3.6 per cent, or 19p, to 546.5p.