FTSE:5,880.87 (+84.99) Mid-250:11,605.52 (+158.17) Small Cap:3,215.99 (+10.78)

THE UK’S FTSE 100 Index rallied for a second day yesterday, erasing losses that followed Japan’s March 11th earthquake, after earnings from Kingfisher and Next beat estimates and Deutsche Bank recommended British retailers.

The benchmark FTSE 100 climbed 1.5 per cent to 5,880.87 at the close in London, the highest level since March 9th.

“Buy UK retailers,” Deutsche Bank strategists including Joelle Anamootoo and Michael Biggs wrote in a report yesterday. “We expect general retailers to outperform as household spending growth exceeds expectations in the second half of 2011.”

Stocks kept gains even after a US report showed orders for durable goods fell last month.

Retailers and mining shares helped European stocks advance yesterday, outweighing concern that Portugal will need a bailout after prime minister José Sócrates resigned.

Kingfisher jumped 7.2 per cent to 261.4p after the retailer reported a 22 per cent increase in full-year adjusted pre-tax profit to £670 million. That compared with the average analyst estimate of £667.9 million.

The company also said it planned to open more stores in Russia and China and increase common product ranges.

Next rallied 4 per cent to 2,043p after reporting a 9 per cent gain in full-year pre-tax profit to £551 million. That topped analysts’ estimates of £549.3 million. Next also raised its final dividend by 13 per cent to 53p.

Marks and Spencer, the UK’s largest clothing retailer, advanced 3.7 per cent to 358.1p and Tesco, Britain’s biggest retailer, gained 2.3 per cent to 389p.

Deutsche Bank named Kingfisher as its “top pick” and said Marks and Spencer “could provide insulation” against rising interest rates

Premier Oil rose 4 per cent to 1,988p as the company reported a 15 per cent rise in full-year profit and forecast production will reach 75,000 barrels of oil equivalent a day in the first quarter of 2012.

BG climbed 4.3 per cent to 1,538p, Royal Dutch Shell increased 1.6 per cent to 2,235p and BP jumped 2.3 per cent to 480.9p.

Cable and Wireless Worldwide tumbled 14 per cent to 54.2p after the telecommunications company said gross margins in its legacy voice business would decline more next year than previously forecast. – (Bloomberg)