Vodafone injects a little happiness
The mobile phone group's upgraded sales forecast adds to a mining sector rally to fuel index gains
The top riser on the second tier was also a mining group: Ferrexpo jumped 12.3% to 57p on the FTSE 250 index after bucking the recent trend for negative earnings news and instead posting forecast-busting 2008 numbers, thanks to a 21% decline in costs.
Miners apart, Vodafone was the main attraction as the mobile phone group beat forecasts to report third quarter revenue growth of 14.3%, helped by the weak pound, and upgraded its sales forecasts for the full year to £40.6-41.5 billion. Vodafone jumped 7.0% to 137.2p.
Returning to the commodities sectors, BP edged 0.5% higher to 487.5p despite the oil price collapse and a loss at its Russian joint venture TNK-BP taking a chunk out of its fourth quarter profits. Thanks to higher oil and gas prices earlier in 2008, however, BP's adjusted full-year earnings still came in 39% higher year-on-year at $21.2 billion—levels unlikely to be surpassed for another few years given the weakened global economy that could keep oil prices and fuel demand low.
Shares in Imperial Tobacco and British American Tobacco gained 1.1% to 1,872p and 0.9% to 1,908p respectively after the former issued a reassuring quarterly trading update in which Imperial said underlying trading is in line with its expectations but it could receive a currency boost if current foreign exchange rates persist.
Not every stock was a winner, however. London Stock Exchange was the worst performer of the session, dropping 7.2% to 422.5p amid concerns raised by the European Union’s proposal that central clearing of credit derivatives be executed in Europe, prompting fears that London could lose its reputation as financial centre. London Stock Exchange reporting a 13% drop in trading revenues did little to help alleviate the situation.
On the economic front, the UK construction industry continued to contract over January but at a lesser pace than the previous month, official figures showed today, and individual companies were more confident on the outlook than they have been over the past seven months.
The Chartered Institute of Purchasing and Supply/Markit construction PMI reading came in at 34.5 last month—any figure below 50 represents a contraction—the highest in three months and up from December’s 29.3 reading. Building materials group Wolseley rose 5.3% to 169.9p and commercial property firm Hammerson was 2.7% higher at 377.5p.
The FTSE 100 index closed up 2.1% or 87.0 points to 4,164.46 and the FTSE 250 index climbed 1.3% or 78.0 points to 6,130.77, while Wall Street eked out marginal gains in the US.
Looking ahead to tomorrow, the latest reading of the PMI Services Survey and the release of the Nationwide Consumer Confidence will be eyed for further indications as to the health, or lack of health, of the UK economy. BHP Billiton and ENRC are among those reporting quarterly or full-year earnings.
