Bank earnings and global data push markets to a six-week high

The pound climbed another two cents against the dollar after better-than-expected bank profits and some well received US data led investors to sell the dollar.

Shares stormed to a six-week high in afternoon deals after better-than-expected bank earnings and similarly well received economic news across the globe.

The FTSE 100 closed the day at 5397, up 139 points, or 2.65%. 

In the US the Dow Jones Industrial Average raced 186 points higher at 10,651 after manufacturing and construction data impressed. The June US ISM manufacturing data fell back from July's level but was higher than forecast and still showed strong growth in the sector.

That added to pressure on the dollar especially as Federal Reserve chairman Ben Bernanke reiterated his concerns about the outlook for the world's largest economy suggesting he is unlikley to approve a rise in US interest rates anytime soon.

By the end of European trading, sterling was up more than 2 cents against the dollar at $1.5902 already bolstered by manufacturing data here this morning.

Mark Bolsom, head of the UK trading desk at Travelex, said: 'Momentum is building in the UK economy, which seems to have turned a corner since the contagion fears during the eurozone crisis two months ago.'

Earlier, investors cheered data from China but for different reasons.

A survey of Chinese purchasing managers' intentions declined to its lowest level in nearly a year and a half in July, prompting hopes that the government there would rein in recent attempts to slow the country's economic growth.

On the corporate front, surprisingly good half-year results from HSBC and France's BNP Paribas bank also helped to lift the mood, while mining stocks surged on the economic data.

HSBC shares finished the day up 34p at 677p. Xstrata was 59.5p at £10.75 and Vedanta was up 127p at £25.68.

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