London shares rise for first time this week
UK blue-chips put an end to a three-session losing streak on Thursday as financials and miners bounced back from recent lows
The FTSE 100 index closed up 31.2 points or 0.7% at 4,362.6, bringing the year-to-date performance an overall slide of 1.6%, while the FTSE 250 index took on 57.6 points or 0.8% to 7,428.8.
Positive stocks outnumbered negatives by almost three to one in London’s leading index, with banks and assurers featuring heavily among the risers. Insurance firms Prudential, Friends Provident, Old Mutual, Admiral, Legal & General and Standard Life each added 3.1%-6.7%; banks Standard Chartered, Barclays, Royal Bank of Scotland and Lloyds Banking Group gained 3.8%-8.1%, bouncing back from Wednesday’s falls.
But it was industrial software company Invensys that topped the leaderboard with a 13.3% rise to 224p after announcing it managed to end its fiscal-year to March 2009 with no debt. “This, coupled with a £400 million banking facility and strong cash conversion (around 120%), should go a long way towards reassuring investors,” Charles Stanley analyst Jeremy Batstone-Carr said.
Miners were also on the up as investors sought out bargains following the sector’s weak performance in the first half of the week. Fresnillo, Kazakhmys, Rio Tinto, Randgold Resources and Xstrata climbed between 3.5% and 11.7% higher. Commodity followers will be watching Kazakhmys’s annual general meeting tomorrow and interim management statements from oil services group Petrofac and mid-cap producer Dana Petroleum.
Oil & gas producers were among the losers on Thursday, however, after energy watchdog the International Energy Agency said in late UK deals on Wednesday that global demand for oil is expected to drop at its sharpest pace since 1981 this year. Cairn Energy fell back 2.0% to 2,304p, Royal Dutch Shell eased 1.5% to 1,612p, and BP shed 1.2% to 504.25p.
Thomas Cook Group was the worst performer, 7.3% weaker at 228.25p after the tour operator reported an increase in pretax losses in the first half of the year, with net debt widening to a higher-than-expected £1 billion. Rising interest costs at the firm could lead analysts to trim full-year forecasts but broker reactions to the results were generally upbeat: “Thomas Cook's seasonal first half loss increased, as expected, but today's interims were always about the outlook statement - and this was very positive,” Numis Securities analyst Wyn Ellis said.
Earnings news was also the cause behind BT Group’s decline. The shares dropped 6.4% to 88.4p after the telco slashed 15,000 more jobs, cut its dividend, and announced a swing to annual losses on the back of surging pension costs and a £1.6 billion write-down.
The write-down at its Global Services division was the key item for many investors and the business had once been billed as BT’s growth driver and the today’s write-down figure was more than twice as large as expected.
On a more optimistic note, analysts appeared to agree that going forward these results should be seen as having wiped the slate clean.
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