FTSE starts 2010 higher led by heavyweights

Nicola Poskitt, Market Analyst, City Index commented: "The FTSE 100 started the year on the front foot, rising over 0.5% in early trading led by the heavyweight banks and energy firms.

We have seen investors coming in this morning in positive moods and firmly looking for equity markets to continue their moves higher after last year saw the FTSE rally 22%.

The sentiment is still on the recovery theme and considering the fact that historically the first trading day of the year usually ends with gains, this mornings rally is no surprise.

The main buying we have seen has taken place within the heavyweight mining, banking and energy firms.

Investors will pay close attention to US ISM Manufacturing data later this afternoon as another gauge of the US recovery.

Royal Bank of Scotland

RBS is leading the banking stocks higher after an upgrade from BNP Paribas to outperform and issuing a ‘things can only get better?' note, highlighting that the recent share price weakness and expected asset disposals could potentially reinvigorate investor interest in RBS shares.

RBS and Lloyds are also seeing investor interest after reports in the press over the weekend that Brazilian lender Itau Unibanco is considering buying stakes in one of them.

Energy and Miners stronger

Energy firms and the miners are also in demand with both Copper and Crude Oil prices rising 2% on the back of a weaker US Dollar. Crude Oil returning to trade above the $80 mark is also helping to facilitate extra demand in oil firms. As a result, Cairn Energy, Eurasian Resources and Vedanta are all topping the FTSE winner list.

Cairn Energy leads

Cairn Energy leads the gainers list, boosted in part by a stronger sector, but also after the firm secured a second drilling rig in Greenland. The move triggered a BofA/Merrill Lynch to upgrade its net asset value for Cairn by 7% which has been met positively by investors."