Energy stocks keep the FTSE warm despite banking falls
THE FTSE 100 gained 0.2 per cent yesterday, keeping level after a rally from heavyweight energy issues offset weakness in banks and mining stocks. The index closed 9.23 points higher at 5,200.97, after ending 1 per cent lower on Monday.
The blue-chip index has gained about 51 per cent since hitting a six-year low in March, though is still 3.7 per cent below its level in mid-September 2008, before the collapse of Lehman Brothers.
Energy stocks added the most points, headed by BP, which gained 4.8 per cent after the it reported a halving of third-quarter profits but beat forecasts by a wide margin.
“BP provided the FTSE’s fuel today, stoking hopes that UK third-quarter corporate earnings will outperform, but there remains enough uncertainty, in a thinly traded market, to curb overall enthusiasm,” said Mic Mills, senior trader at ETX Capital.
BG Group, which posts its third-quarter results today, added 0.8 per cent, while Royal Dutch Shell firmed 1.7 per cent, and Cairn Energy gained 0.8 per cent.
Pharmacueticals were also in demand ahead of third-quarter numbers from the sector later this week. GlaxoSmithKline, due to post results today, added 2.2 per cent. AstraZeneca, scheduled to report its results tomorrow, rose 2 per cent, while Shire added 0.5 per cent.
Elsewhere among the blue-chip gainers, a broker upgrade boosted Reed Elsevier, up 3.3 per cent. Exane BNP Paribas lifted its rating for the Anglo-Dutch publishing group to “outperform” from “underperform” on valuation grounds.
Home Retail Group was also hoisted by broker comment, adding 2.7 per cent as Barclays Capital started coverage on the Argos-owner with an “overweight” rating in an otherwise negative initiation note on the European retail sector.
Banks were the biggest drag on the blue-chip index, with Royal Bank of Scotland the top faller, off 8.2 per cent. Investors were unsettled by mounting fears that RBS and Lloyds Banking Group could be ordered into disposals by the European Commission after Dutch peer ING on Monday announced that it would split into two and launch a rights issue in a move designed to satisfy regulators. Lloyds shares fell 6.2 per cent, while Barclays, HSBC and Standard Chartered shed 0.8 to 3.6 per cent.
Miners were weak reflecting easier metal prices as doubts about the demand outlook resurfaced. Vedanta Resources, Fresnillo, Rio Tinto, Xstrata, Anglo American and Kazakhmys lost 2.1 to 5.1 per cent.