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Cheer after debt auction successes.

Byline: JAMIE GRIERSON

A ROUND of successful debt auctions across Europe lifted the London market yesterday in the latest sign that a series of credit rating downgrades have been broadly shrugged off by investors.

The FTSE 100 Index closed 36.5 points higher at 5693.95 after debt auctions by Spain, Greece and Europe's bailout fund drew solid interest from investors, while the Dax in Germany advanced 1.8% and France's Cac-40 added 1.1%.

The optimism on markets came despite Standard & Poor's decision to downgrade the credit ratings of several eurozone countries, including France, and a similar downgrade to the European Financial Stability Fund (EFSF).

Meanwhile, resource stocks gave support after Chinese economic data came in above expectations, with Chinese retail sales jumping 18.2% and fourth quarter gross domestic product growth beating expectations at 8.9%.

The pound dropped against the euro to 1.20, as the single currency was strengthened by the successful bond auctions.

However, sterling was up at 1.53 against the dollar, as traders ditched the safe-haven greenback amid optimism over the global outlook.

Royal Bank of Scotland's shares pared gains but still closed 1.7% higher following the sale of its aircraft leasing business for nearly pounds 5 billion, while Shore Capital improved its recommendation for the stock from "sell" to "hold".

RBS shares climbed 0.4p to 24.9p and added 14% since last Thursday when the bank unveiled significant restructuring plans at its investment arm, a move dubbed by Shore Capital analyst Gary Greenwood as "another step in the right direction".

Burberry managed to claw its way back into the black after spending most of the day on the back foot.

Shares added 1p to 1301p after the company said traditional Burberry favourites such as jackets and handbags, together with growth in knitwear, men's accessories and tailoring, fragrance and watches, helped retail like-for-like sales grow 13%.

Elsewhere in the sector, Dixons Retail pleased analysts by limiting the drop in its like-for-like sales for the 12 weeks to January 7 to 5%.

Chief executive John Browett added that the PC World and Currys owner had gained market share in the UK over the period. The FTSE 250 Index stock was 11% or 1.1p higher at 10.95p.

Meanwhile, investors backed plans by Mr Kipling and Hovis firm Premier Foods to cut 600 jobs - 5% of its workforce - in a bid to save pounds 40 million by next year as shares surged more than 14%.

The debt-laden group, which was recently given extra time by its banks to get its finances in order, said it wants to reinvest the savings in growing its eight key brands, which also include Batchelors, Ambrosia, Oxo and Bisto. Shares were 0.8p higher at 6.6p.

The biggest Footsie risers were Polymetal International up 38p at 1129p, Rio Tinto ahead 105p at 3694p, Intercontinental Hotels Group up 35p at 1255p and Fresnillo 46p at 1753p.

The biggest Footsie fallers were Essar Energy down 45.4p at 127p, Man Group off 3.2p at 107.1p, Admiral down 16p at 862p and Icap off 5.8p at 325.6p.
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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Date:Jan 18, 2012
Words:522
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