FTSE CLOSE: Markets lifted by stronger UK, US, eurozone and China manufacturing figures
17.10 (close): Banking stocks led strong gains on the London market today as optimism surrounding the global economic outlook strengthened.
The FTSE 100 Index closed 109.1 points higher at 5790.7, just shy of its recent six-month high of 5800, after a raft of positive manufacturing data lifted sentiment.
Chinese factory output saw a modest improvement, a Markit/CIPS manufacturing survey for the UK and eurozone was encouraging and the US sector also saw stronger growth in January.
Economy trends: Upbeat China factory data helped to counter weaker-than-expected U.S. economic reports
The improved mood lifted the Dax in
Germany and France's Cac-40 by 2.4 per cent and per cent respectively,
while Wall Street's Dow Jones Industrial Average was 1 per cent ahead at
the time of the London close.
The upbeat outlook distracted traders
from ongoing uncertainties about whether Greece will agree a deal with
creditors to write-off a large chunk of its debts.
The manufacturing data strengthened
the pound, which rose against the dollar at 1.58, but sterling was down
against a stronger euro at 1.20.
Banks were among the big risers, with
Barclays up 11.6p at 224.1p, Royal Bank of Scotland ahead 1.1p at 27.7p,
and Lloyds 1.6p higher at 32.2p.
BP also benefited as oil prices of
near 100 US dollars a barrel meant the heavily-weighted FTSE 100 stock
added 2% or 12.2p to 483p. Miner Xstrata improved 45p to 1119.5p and
Weir Group, which makes pumps for the oil sector, was up 67p at 2022p.
There was also momentum from corporate
results after the financial trading firm ICAP indicated that profits
for the year to March will be near the upper end of current City
forecasts. Shares jumped 7 per cent or 26p to 362p.
Imperial Tobacco shrugged off a 7 per
cent fall in volumes in the final quarter of 2011 after sales were hit
by the crisis in Syria and more declines in Spain amid the economic
The firm said it was on track to meet
full-year targets after its key strategic brands of Davidoff, Gauloises
Blondes, West and JPS, saw 10 per cent sales growth. Shares rose 33p to
ARM Holdings was at the top of a
shortened fallers' board as investors indulged in some profit-taking
following a strong run for the tech company's shares.
The Cambridge-based group, which
yesterday reported a strong set of quarterly results, including a 45 per
cent increase in pre-tax profits to 69 million in the final three
months of 2011, saw its shares slip 17p to 592.5p.
Outside the top flight, Home Retail
Group lost earlier gains after it appointed John Walden, who has held
senior positions at BestBuy and department store Sears, to revive the
catalogue chain. Shares were down 1p to 106.4p.
Online grocer Ocado was up 10 per cent
after results yesterday showed it was close to breaking even at the
bottom line, cutting losses by 80 per cent in the year to November 27 to
2.4 million. Shares were 11.1p lower at 285p.
And Johnson Matthey, the catalysts and
precious metals firm, also encouraged investors after it reported
further good progress in its third quarter. Shares were 104p higher at
2155p, a rise of 3%.
The biggest Footsie risers were
Schroders up 126p at 1576p, Icap ahead 26p at 362p, Barclays up 67p at
1260p, Johnson Matthey ahead 108p ahead 2159p.
The biggest Footsie fallers were ARM
Holdings down 17p at 592.5p, BSkyB off 8p at 682p, Admiral down 8p at
933p and Smith & Nephew off 2.5p at 612.5p.
markets have racked up strong gains today after the latest round of
monthly manufacturing reports boosted confidence in the global economy.
U.S. manufacturing sector accelerated in January, expanding at the
fastest pace in past eight months, adding to optimism generated by
figures from the UK, eurozone and China.
positive sentiment drove the Dow Jones 138.9 points higher to 12,771.8,
while the FTSE 100 was up 76.7 at 5,758.3 as today's session drew to a
Paul Bregg of Western Union Business Solutions said the Chinese factory data was impressive considering it included the Lunar New Year celebrations when the entire country shut down for a week.
'Picking apart the data, we see a drop in export-orientated orders and a pick-up in domestic demand. This is exactly what every economist and market pundit around the world states as China’s game plan for success; decreased reliance on exports and increased domestic demand,' he said.
'Beijing seems to have the Midas touch when it comes to their economy; perhaps we are witnessing the first central bank engineered soft landing in modern history'
Today's focus on the latest manufacturing data helped to offset ongoing concerns over Greece and its debt mountain, and growing worry that Portugal might end up needing a second bailout and having to restructure its debts too.
'Fortunately for investors the latest (very) bad news emanating from Athens has been overshadowed by a timely improvement in UK manufacturing purchasing managers' index data and confirmation that Goldilocks is alive and well and living in Beijing (as if we ever doubted it),' commented Jeremy Batsone-Carr of broker Charles Stanley.
'Overnight we learnt that despite weeks of “uppish” headlines suggesting that talks between Greece and its hold-out private sector bond holders were closing in on agreement…they aren’t.'
'At present talks between Greece and its creditors, for all the hopeful headlines, are stalled. There are now just seven weeks to go before Greece must find €14.5billion.'
On the corporate front, ARM Holdings was at the top of a shortened fallers' board today as investors indulged in some profit-taking following a strong run for the tech company's shares.
Imperial Tobacco shares were up 38.5p at 2,308.5p although its sales have suffered a series of blows from international sanctions against Syria, economic gloom in Spain and destocking following price hikes in the U.S and Ukraine.
The firm saw underlying volumes of the products it sold fall 7 per cent in the final quarter of 2011, although revenues were down just 1 per cent as it benefited from price rises and the sale of more expensive products. Read more here.
The Dow Jones has opened 73.9 points higher at 12,706.8 after an employment report showed growth in private sector hiring for the 24th month in a row.
A key U.S. manufacturing report is due out later, following encouraging updates on the sector's performance in the UK, eurozone and China.
The FTSE 100 is trading 72.1 points up at 5,753.7.
Worry about the state of Greece's debts was put on the back burner today as investors assessed some hopeful manufacturing data from the UK, China and the eurozone.
Chinese factory output saw modest progress, while a closely-watched Markit/CIPS manufacturing survey showed UK's sector returned to growth in January and the eurozone also showed improvement.
The stronger manufacturing data helped traders overlook ongoing uncertainties about whether Greece will agree a deal with creditors to write-off a large chunk of its debts.
And a successful bond auction by struggling Portugal also helped ease fears over the eurozone debt crisis.
However, investors will now be looking to the U.S. which is also due to report manufacturing figures this afternoon.
Mining and commodity stocks have helped the FTSE 100 gain 72.7 points to 5,754.3 today.
BP added 2 per cent or 11.4p to 482.3p. Miner Xstrata improved 39.8p to 1114.3p and Weir Group, which makes pumps for the oil sector, was up 84.5p at 2040p.
Banks were among the big risers, with Barclays up 9.5p at 222.1p, Royal Bank of Scotland ahead 1.1p at 27.7p, and Lloyds 0.8p higher at 31.5p.
Imperial Tobacco shrugged off a 7 per cent fall in volumes in the final quarter of 2011 after sales were hit by the crisis in Syria and more declines in Spain amid the economic gloom.
The firm said it was on track to meet full-year targets after its key strategic brands of Davidoff, Gauloises Blondes, West and JPS, saw 10 per cent sales growth. Shares rose 43.5p to 2313.5p.
Outside the top flight, Home Retail Group was ahead after it appointed American John Walden, who has held senior positions at Best Buy and department store Sears, to revive the Argos catalogue chain. Shares were up 1.6p to 109p. Read more here, including City reaction to the appointment of someone almost unknown to UK investors.
Joshua Raymond of City Index said of today's market moves: 'It is the better than expected reading of Chinese manufacturing data that gave stocks a kick start to push higher in Europe, with manufacturing expanding in January despite most analysts expecting a contraction.'
But he warned: 'Chinese data has proved to be highly volatile of late and whilst we should take this reading with a pinch of salt, it does help to suggest that the world’s largest developing nation should avoid a hard landing.
'However, a caveat to this of course is whether it impacts Chinese monetary policy, which turned more accommodative towards the end of last year.'
Regarding Greece's ongoing debt negotiations, the current deal for private holders amounted to about a 70 per cent loss but the 'one hundred billion euro question' was how many would accept it, said Louise Cooper of BGC Partners.
'The participation rate is key and yet is almost impossible to predict – any holder who chooses not to participate in the deal is unlikely to publicise the fact, benefiting as they do from the free ride of others taking a loss. Deadlines are fast approaching to avoid default on the €14.5billion Greek bond maturing on March 20.'
And she warned: 'Financial markets are telling us that Portugal is next, that it will need its own debt restructuring plan despite what its politicians and the European Central Bank say.'
The FTSE 100 has advanced 61.8 points to 5,743.2 after manufacturing figures from China showed an expansion in the sector instead of the expected decline.
Mining and commodity stocks were among the major beneficiaries, with heavyweight stock BP putting on 4.5p to 485.5 as the price of U.S. WTI light sweet crude neared $100.
Miner Xstrata improved 22.5p to 1097p and Essar Energy rose 3.15p to 132.3p.
There was also momentum from corporate results after the financial trading firm ICAP indicated that profits for the year to March would be near the upper end of current City forecasts.
Shares jumped 8 per cent or 27.2p to 363.2p, topping the FTSE 100 risers board.
Imperial tobacco saw its stock rise 35p to 2,305p despite a dip in sales in its first quarter.
Johnson Matthey, the catalysts and precious metals firm, also encouraged investors after it reported further good progress in its third quarter. Shares were 69p higher at 2120p, a rise of 3 per cent.
'Positivity abounds at the beginning of
the month, and shares are pushing higher on the back of better than
expected Chinese Purchasing' Managers Index data pointing to steady
underlying manufacturing conditions in the world’s second-largest
economy,' said Anita Paluch of Gekko Global Markets.
The FTSE 100 has extended yesterday's gains and moved 55.3 points higher to 5,736.9 on the open.
On the continent, Germany's DAX is up 69.8 points at 6,528.7 while France's CAC 40 is ahead 37.8 points at 3,336.4.
Stocks to watch today include:
BHP Billiton: The firm will cut staff and reduce mine activity at its Nickel West unit in Australia in response to weak metals prices and the impact of a strong Australian dollar, the company said on Wednesday.
Also, BHP Billiton is to sell its 37 perc ent non-operated interest in Richards Bay Minerals to Rio Tinto, sealing its exit from the titanium minerals industry.
Rio Tinto: Its Energy Resources of Australia business expects uranium output in 2012 to recover to between 3,000 and 3,700 tonnes after mining interruptions drove it to a A$154million ($164million) loss in 2011.
Eurasian Natural Resources: The miner issues a fourth-quarter production report.
ICAP, Imperial Tobacco, Johnson Matthey, United Utilities, Brewin Dolphin: Trading updates.
Pearson: U.S. peer McGraw-Hill is exploring the possibility of selling its $2.5billion-plus education business, after its previously announced plan to split the division from its Standard & Poor's financial arm prompted interest from private equity groups, three people familiar with the situation told The Financial Times.
Home Retail Group: The British retail firm's Argos chain is set to announce John Walden as chief executive on Wednesday, The Times said.
Synairgen: The respiratory drug discovery firm posts first-half results.
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