London close: Stocks end higher after better-than-forecast UK retail sales

The FTSE 100 gained 0.69% to 6,103 points at close of trading on Thursday after better-than-expected UK retail sales data.

UK retail sales rose 1.7% in November from October, beating economists’ expectations for a 0.5% increase as shoppers made the most of ‘Black Friday’ bargains. The Office for National Statistics report also showed sales on the year comfortably beat estimates, up 5% versus expectations for a 3% rise.

“There are two things you need for a strong economy, spending and lending, and it seems that the first one is looking very healthy as the year comes to an end,” said James Hughes, chief market analyst at GKFX.

Meanwhile, investors continued to weigh the Federal Reserve’s decision to raise interest rates for the first time in nearly a decade on Wednesday by 25 basis points to 0.50%, as expected by analysts.

Speaking at a press conference after the policy announcement Yellen assured the market that any future interest rate hikes would be gradual. She added that if the Fed had continued to delay a rate rise it could have been forced to implement a more aggressive increase if economic growth soared and inflation suddenly jumped towards the 2% target.

“Overall, we believe Fed and Chair Janet Yellen succeeded in being neither too hawkish nor too dovish, which is reflected in the muted market reaction,” according to Dankse Bank analysts. “We stick to our view that the Fed will hike three times in 2016 and four in 2017.”

In US data, third quarter current account deficit widened to its highest level in nearly seven years, according to the Commerce Department. The deficit increased 11.7% to $121.4bn as US exports fell due to a stronger dollar, making it the biggest shortfall since the final quarter of 2008 and larger than economists had expected.

The Philadelphia Federal Reserve manufacturing index fell into negative territory in December. The gauge dropped to -5.9 from 1.9 last month, marking the third negative reading in the past four months and weaker than analysts’ expectations for a reading of 1.

The number of first time unemployment benefits claimants in the US fell last week, according to data from the Department of Labor. New claims fell by 11,000 to a seasonally-adjusted 271,000, coming in a little better than expectations of 275,000.

Elsewhere, German business confidence fell unexpectedly in December, according to the IFO. The business climate index fell to 108.7 from 109 in November.

Oil prices remained under pressure with Brent crude down 0.7% to $37.11 per barrel and West Texas Intermediate down 2% to $34.81 per barrel at 1505 GMT. The US Energy Information Energy on Wednesday said that domestic oil inventories rose by 4.8m barrels last week, compared to analysts’ estimate for a decrease, adding to concerns about an oversupply in the market.

Shares in Premier Oil and Nostrum Oil & Gas edged lower following the report.

Standard Chartered rallied after news that it has hired HSBC veteran Simon Cooper to head up its corporate and institutional banking division.

Old Mutual continued to rebound as political issues in South Africa subsided. A broker downgrade and weaker rand weighed on the stock on Thursday last week, compounded by South Africa's president unexpectedly sacking finance minister Nhlanhla Nene, replacing him with relatively unknown David van Rooyen.

J Sainsbury rose on the back of data from Kantar Worldpanel earlier this week that the supermarket has increased sales and is growing its market share.

Berkeley Group declined as it went ex-dividend.

Elementis slumped after warning that 2015 earnings would be at the lower end of market expectations.