The FTSE 100 clocked up its best week in four months as luxury and alcohol stocks soared amid signs consumers are still splashing out on high-end goods.

On an upbeat day for investors, the blue-chip index rose 1.4 per cent, or 105.36 points, to 7635.09.

The FTSE 250, meanwhile, gained 0.6 per cent, or 114.92 points, to 19338.02.

That took the FTSE 100’s gains this week to more than 2.3 per cent – its best performance since mid-September.

Yesterday’s rally was driven by luxury and alcohol stocks after a handful of reassuring updates provided some much-needed respite for two sectors that have come under pressure as shoppers cut back on expensive purchases.

Boost: On an upbeat day for investors, the blue-chip index rose 1.4 per cent, or 105.36 points, to 7635.09

Boost: On an upbeat day for investors, the blue-chip index rose 1.4 per cent, or 105.36 points, to 7635.09

Boost: On an upbeat day for investors, the blue-chip index rose 1.4 per cent, or 105.36 points, to 7635.09

Barclays upgraded the European luxury sector after the LVMH on Thursday reported record sales and profits last year following a strong final quarter.

The feel-good factor surrounding the French giant swept over London-listed firms, with Burberry surging 4.9 per cent, or 63p, to 1341.5p. And drinks giant Diageo gained 5.1 per cent, or 139p, to 2849p after Cognac maker Remy posted upbeat results.

Russ Mould, investment director at AJ Bell, said: ‘It seems the sector could go through a phase where investors are rewarding companies that say things are not as bad as feared, rather than saying everything is going well.’

But not everyone was so bullish. Analysts at JP Morgan said the positive sentiment surrounding UK retailers is likely to change in the next two to three months.

The bank downgraded its ratings on Tesco and Sainsbury’s, Britain’s two biggest supermarkets, as it expects them and others to see a slowdown in line with fellow grocers in the US and Europe. Shares in Tesco fell 1.8 per cent, or 5.3p, to 293.5p and Sainsbury’s lost 1.9 per cent, or 5.4p, to 276p.

There was also a downgrade for Tullow Oil as analysts at Stifel warned the West-African energy company’s debts will affect production. Shares slumped 6 per cent, or 2.08p, to 32.42p.

First Group, the transport group behind Avanti West Coast and Great Western Railways (GWR), moved to expand its footprint over North Yorkshire with the purchase of coach and bus operator York Pullman. But shares slid 0.1 per cent, or 0.2p, to 169p.

Another business to make gains was home improvement company Wickes after it said it expects profits for 2023 to have been at the top end of forecasts. Shares rose 8.4 per cent, or 12.1p, to 157p.

Following its best-ever summer, business is still booming for On the Beach. The value of the holidays booked in its peak period up to January 24 were 27 per cent higher than a year earlier. But shares slid 2.2 per cent, or 3.6p, to 160.4p. Premier Inn owner Whitbread traded higher after it extended its £300m share buyback programme by three months. The stock rose 1.3 per cent, or 45p, to 3646p.

There was also good news for investors in digital advertising agency S4 Capital after it outlined plans for a £2.7m share buyback just days after it reported a 4 per cent fall in revenues for 2023. Shares shot up 6.1 per cent, or 2.48p, to 42.94p.

Even a profit warning did not stop car dealer Motorpoint from announcing plans to buy back £5m worth of stock from investors.

The firm expects profits for the year to March 31 to be up to £6m below forecasts after a tough third quarter. Alongside the share buyback plans, Motorpoint remained upbeat over its plans to cut costs and expectation that the used car market will bounce back. Shares added 0.7 per cent, or 0.7p, to 98.7p.

Lender Paragon Bank made a positive start to its financial year and reiterated its annual forecasts. But shares slid 1.5 per cent, or 11p, to 712p.

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