FTSE CLOSE: Greek bailout hope and rising oil prices help drive market up
17.15 (close): Rising oil prices and optimism that Greece will be saved from a calamitous default helped drive London's leading shares index closer to the 6000 mark today.
Crude oil prices in New York rose 1 per cent to a nine-month high of 105 US dollars after Iran halted supplies to the UK and France in retaliation for sanctions imposed by the EU.
This helped heavyweight BP's shares to push through the 500p barrier for the first time since last January at one stage before it closed 10.3p higher at 499.3p. The wider FTSE 100 Index was up 40.2 points at 5945.3, its highest close for seven months.
Hopes that Greece will clinch the
additional 130billion euro (107.9billion) bailout it needs to avoid
bankruptcy added to the recent positive mood for investors.
As the London market closed, eurozone
finance ministers were meeting in Brussels to discuss the situation in
the debt ravaged nation amid reports they were close to finalising a
France's Cac-40 and Germany's Dax
were up about 1 per cent and 1.5 per cent respectively, while US markets
were closed for Presidents' Day.
The pound was down against the euro at
1.20 after the single currency was boosted by the Greek optimism. But
sterling was up against the dollar at 1.59.
And a surprise easing in monetary
policy by China's central bank boosted miners and other
commodities-driven firms after the move in Beijing raised hopes for a
pick-up in industrial demand.
Weir Group, which makes pumps for the
oil sector, was the biggest riser, up 7 per cent, or 135p to 2186p,
while miner Vedanta Resources was 46p higher at 1358p.
Sentiment also continued to improve
towards Royal Bank of Scotland, which was among the biggest risers, up
0.9p to 28.5p, while Lloyds Banking Group was up 0.9p to 36.3p.
This was despite expectations the pair will report combined losses of at least 4billion for 2011 on Thursday and Friday.
Amid signs of a resolution in the
Greece crisis and with lenders poised to benefit from the recent signs
of improvement in the global economy, shares in RBS have jumped 40 per
cent since the start of the year.
In a quiet session for corporate
news, JJB Sports jumped 15 per cent after it offered beleaguered
investors a glimmer of hope in its survival battle.
The group's like-for-like sales were
down by 7.6 per cent in the 26 weeks to January 29, but this was better
than the 17.9 per cent decline over the previous half year, while the
company's gross margin also showed improvement.
JJB, which rose 1.5p to 11.5p, is
forecast to make a 60million loss in the financial year just finished.
And despite today's improvement in shares, the company's market value
remains at a paltry 33million.
The biggest Footsie risers were Weir
Group up 135p at 2186p, Vedanta Resources ahead 46p at 1358p, Aviva up
12.6p at 382.6p and Royal Bank of Scotland ahead 0.9p at 28.5p.
The biggest Footsie fallers were
Shire down 26p at 2252p, Tate & Lyle off 6.5p at 701p, Imperial
Tobacco down 19p at 2500p, and Severn Trent off 11p at 1540p.
15.55: The FTSE 100 is 38.2 points higher at 5,943.2 as the session draws to a close.
With U.S. markets closed for Presidents Day, there was no major news from across the Atlantic to move the London market.
The FTSE 100 is hovering at nine-month highs, up 43.9 points at 5,949.
A surge in oil prices has caused shares in market heavyweight BP to jump more than 2 per cent, while hopes that Greece would clinch the bail-out funds it needs to avoid bankruptcy added to the recent positive mood for investors.
BP was among the biggest risers and stood above the 500p barrier for the first time since January as U.S. WTI crude lifted to more than $105 a barrel.
This reflected Iran's decision to halt oil exports to Britain and France amid ongoing tensions over the country's nuclear programme and a surprise easing in monetary policy by China's central bank. Read more about the oil price surge here.
The move in Beijing boosted hopes for a pick-up in industrial demand and caused a number of commodity stocks to make headway.
Kazakhmys and BHP Billiton were up by more than 3 per cent, or 37p to 1161p and 63p to 2086p respectively.
As well as the rally for BP, which was 11p higher at 500p, Royal Dutch Shell added 3p to 2330p and Tullow Oil lifted 29.5p to 1595.5p.
Sentiment also continued to improve towards Royal Bank of Scotland, which added 0.8p to 28.4p, while Lloyds Banking Group was up by more than a penny to 36.5p. This was despite expectations the pair will report combined losses of at least 4billion for 2011 on Thursday and Friday.
With the Greece crisis showing signs of resolution and lenders poised to benefit from the recent signs of improvement in the economy, shares in RBS have jumped 40 per cent since the start of the year.
Wall Street is closed for a holiday.
Hopes are rising that the FTSE 100 could touch the 6,000 mark again as a 'risk-on' mood overtakes the market.
For now the index is simply holding onto gains – up 49.3 points at 5,954.4 in late-morning trading.
But Joshua Raymond of City Index said: 'If current upside momentum continues, the FTSE 100 now appears primed for an attack at the key psychological 6,000 level.
'Whilst there is every chance that being a key level investors could start to bank profits as we edge closer to 6,000, it will be important to see bargain hunters emerge from any potential price correction if the positive start to the year is to continue past the 6,000 level.
'With U.S. markets closed for Presidents Day, and little on the agenda in the shape of economic data until Wednesday, investors' hands are trading somewhat freely today and this is helping to drive demand for stocks with risk appetite positively higher.'
Markets were always set for a strong start this morning following weekend developments, according to David Jones, chief market strategist at IG Index.
'Part of this is due to renewed hopes that we will finally this time see a resolution for the Greek bailout deal – a meeting of eurozone ministers later today has heightened expectations that this one is going to be different from all of the others.
'Plus the Chinese central bank cutting reserve requirements for China’s banks has fuelled speculation that this will help industrial production, boosting UK commodity shares.'
Michael Derks, chief strategist at FXPro, said: 'It just does not get any better for risk assets at present – China’s latest easing follows Japan’s last week and the Bank of England’s earlier this month, with the [U.S] Fed still contemplating more quantitative easing and the European Central Bank about to undertake another massive helicopter drop of liquidity next week.
'Meanwhile, the news coming out of the major economies in recent weeks has surprised on the upside almost with exception.'
A surge in oil prices has lifted market heavyweight BP and helped to propel the Footsie 48.1 points higher to 5,953.1.
Iran's decision to halt oil exports to Britain and France amid ongoing tensions over the country's nuclear programme sent U.S. WTI light sweet crude to a nine-month high near $105 a barrel while Brent crude was at $120.85 a barrel.
BP stood above the 500p barrier for the first time since January earlier in the session, but the stock has since pulled back to trade 9.35p up at 498.3p.
Royal Dutch Shell added 3.5p to 2330.5p and Tullow Oil lifted 19p to 1585p.
In a quiet session for corporate news, shares in JJB Sports jumped 17.5 per cent after it offered beleaguered investors a glimmer of hope in its survival battle.
The group's like-for-like sales were down by 7.6 per cent in the 26 weeks to January 29, but this was better than the 17.9% decline over the previous half year, while the company's gross margin also showed improvement.
JJB, which rose 1.75p to 11.75p, is forecast to make a 60million loss in the financial year just finished.
The FTSE 100 opened 32.2 points higher at 5,937.3 as Greece looked
set to secure a bailout deal today that would ease sovereign debt
tensions in the eurozone.
The bloc's finance ministers are scheduled to sign off on a €130billion
rescue package in a move aimed at averting a messy default by Greece.
Investors are also heartened by an intervention by China's central bank to stimulate growth in the world's second-largest economy.
It cut the amount of cash banks must hold in reserves, boosting lending capacity for the second time in nearly three months in a bid to shore up the slowing economy.
Mining stocks are in focus today as a large part of the newly available credit was expected to finance infrastructure and capital investment, fuelling demand for basic resources by the world's largest consumer of raw materials.
In a move of interest to energy firms, supply concerns lifted crude futures after Iran ordered a halt to its oil sales to Britain and France, action seen as retaliation against tightening EU sanctions.
The decision came as a team of U.N. inspectors flew to Tehran to press the Islamic Republic over its disputed nuclear programme.
Trading volume is expected to be light today as U.S. markets will be closed for Presidents Day.
Stocks to watch today include:
Lloyds Banking Group: The bank is to strip five current and former senior bankers of 1million in bonuses over their role in the mis-selling of payment protection insurance (PPI).
CSR: The chipmaker reports fourth-quarter results.
International Ferro Metals: The South African miner reports first-half results.
XP Power: The electrical components maker reports fourth-quarter results.
AFC Energy: The developer of low-cost fuel cell systems reports preliminary results for 2011.
Animalcare Group: The supplier of veterinary products reports preliminary results for 2011.
TR European Growth Trust: The investment trust reports first-half results.
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