FTSE 100 hangs in there as investors regain confidence
THE FTSE 100 rose yesterday as gains from financial stocks, boosted by strong numbers from the UK arm of Spain’s Banco Santander, and positive broker comment, outweighed a weak mining sector.
The index closed 18.69 points, or 0.4 per cent, higher at 4,547.53, after ending 1.3 per cent lower on Tuesday when it failed to break records with a twelfth session of gains.
The market “just seems to be hanging in there and it reflects the growing conviction that there is a recovery out there, that the global economy is going to be reflated, which is what the central banks and the policymakers have been attempting to do,” said Mike Lenhoff, chief strategist at Brewin Dolphin.
Banks were the best performing sector after the UK arm of Santander, which includes Abbey, said profits rose by a third in the first half of the year as bad debts showed a second consecutive quarterly decline.
HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered rose between 0.7 and 3.6 per cent.
Life insurers were also higher. Aviva gained 3.3 per cent after Deutsche Bank lifted its rating on the stock to “buy” in a review of the UK sector which saw possible consolidation on the horizon. Prudential, Standard Life, Old Mutual and Legal & General added 1.5 to 3.9 per cent.
Energy stocks were mixed as crude prices fell below $64 a barrel after an unexpected rise in US crude inventories threw the focus on weak demand.
BP, after losing 3.1 per cent on Tuesday following its mixed results, added 0.2 per cent, while Royal Dutch Shell put on 0.5 per cent ahead of its second-quarter numbers due today.
BG Group fell 2.7 per cent after it posted a 31 per cent drop in its second-quarter profits and said lower gas demand meant it would not meet its 2009 production target.
Weak metals prices weighed on the mining sector, the biggest drag on the index, with Anglo American, Antofagasta, Fresnillo and Rio Tinto down between 0.7 and 4.4 per cent.
BHP Billiton fell 2.4 per cent. The miner has agreed with unnamed customers to take a 33 to 44 per cent price cut for contracted iron ore shipments, covering 23 per cent of its total sales volumes.
Drinks can maker Rexam was the top faller, down 8.1 per cent after the group confirmed a £334.3m rights issue but still traded above its theoretical rights price as it reported better-than-expected results.