First gains of the week as Alcoa boosts the markets
THE FTSE 100 closed 0.5 per cent higher yesterday, ending a three-day losing streak on the back of gains in miners after reassuring earnings from Alcoa. The index closed 18.43 points firmer at 4,158.66, having fallen 1.1 per cent the previous session to its lowest closing level in more than two months.
However trading was lacklustre with volume reaching just 70 per cent of the average of the last 90 trading days and there was little reaction to the Bank of England’s decision not to expand its quantitative easing (QE) programme. The Bank said it would keep interest rates steady at 0.5 per cent, as expected, but disappointed expectations it would continue pumping money into the economy until August.
“We’re now very much in the situation of wait and see whether the QE measures, the fiscal and monetary measures are starting to take traction,” said Richard Hunter, head of UK equities at brokerage Hargreaves Lansdown.
Miners were the FTSE’s top performers in the wake of Wednesday’s sell off, encouraged by a less-than-expected loss from Alcoa. Anglo American, Vedanta Resources, Kazakhmys, Antofagasta, Rio Tinto, BHP Billiton and Xstrata gained between 0.2 and 5.6 per cent.
Silver miner Fresnillo grabbed the top spot on the FTSE 100 leaderboard, up 10.1 per cent after Citigroup upgraded to “buy” from “hold”.
HSBC and Barclays were bright spots in an otherwise gloomy banking sector, up 1.4 per cent and 0.4 per cent respectively. Lloyds Banking Group, Standard Chartered and Royal Bank of Scotland fell 0.5 to 0.6 per cent.
Oil stocks were also mixed, with BG Group, Cairn Energy and Tullow Oil down 0.1 to 1.8 per cent, as crude dropped below $60 a barrel. Royal Dutch Shell added 0.5 per cent, while BP climbed 0.1 per cent.
Positive comment from Citigroup lifted Marks & Spencer 2.5 per cent as the brokerage lifted its recommendation on the retailer to “buy” from “hold”. Peers Next and Kingfisher gained 2.5 per cent and 3 per cent respectively.
British Airways was also firmer, up 1.6 per cent. The chairman of Spanish airline Iberia stepped down yesterday and was replaced by proven dealmaker Antonio Vazquez,.
The heaviest blue-chip faller was Aviva as the UK’s second-largest insurer fell 4 per cent, adding to Wednesday’s sharp decline on continued concerns that falling profits may force it to cut its dividends.