THE FTSE 100 index ended higher yesterday with encouraging updates from companies such as 3i Group supporting the broader stock market.
Private-equity group 3i rose three per cent, the biggest gain in the FTSE 100, after it reached the end of a three-year restructuring with strong earnings growth at its portfolio companies.
“The group remains cautious about the current environment given high financial marketvaluations and increased currency volatility. However it looks forward with confidence, with a focus on enhancing the value of the existing investment portfolio,” said Nicolas Ziegelasch, head of equity research at Killik & Co.
Merlin Entertainments rose 1.2 percent. The British operator of tourist attractions like Madame Tussauds waxworks and the London Eye reporter a rise in first-quarter revenue, helped by good weather in Europe and strong trade at its U.S. Legoland Parks.
The FTSE 100 finished 0.3 per cent higher at 6,973.04 points after falling earlier in the session following weaker commodity stocks.
Commodities stocks recovered slightly. The UK mining index was down 0.8 per cent and the oil and gas index slipped 0.6 per cent. Commodities prices pushed energy and mining stocks including Royal Dutch Shell and BHP Billiton more than 1.2 per cent lower.
Investors, however, remained cautious and avoided strong bets, in line with European shares, which were recently hit by a bond-market sell-off. The UK has not been immune to some jitters from the sell-off, but it has been supported by dovish statements from the Bank of England.
“US and UK stocks appear to be preferred versus German stocks for now, mainly because any increases in interest rates in the US and the UK aren’t imminent and on hold for now,” Peregrine & Black senior sales trader Markus Huber said. “Economic growth worries [are] hampering exporters.”
BoE Governor Mark Carney said yesterday it was possible British interest rates would be higher in a year’s time, although the central bank would not raise them too soon and risk slowing the economy.
Several stocks went ex-dividend, including Sainsbury, down 2.3 per cent, and drugmaker GlaxoSmithKline, down 1.4 per cent. UBS analysts also downgraded Glaxo to “neutral” from “buy”, saying company updates on cost structure had led them to cut earnings estimates.