Budget fails to boost market as FTSE 100 treads water

BRITAIN’S top shares added 0.1 per cent yesterday as strength in miners and banks was balanced out by weakness in energy issues, with little overall impact from a Budget that contained few surprises.

At the close, the FTSE 100 was up 4.25 points at 5,677.88, having hit a fresh 21-month intra-day peak at 5,698.87 early in the session before chancellor Alistair Darling’s 2010 Budget, just weeks before an expected election.

“It was not really an eventful budget, with the market going nowhere in reaction, and investors are now likely to hold fire as they await a British election announcement, expected imminently,” said Sam Wright, a trader at Spreadex.

Weak energy issues were one of the main curbs on blue chip sentiment, with the sector retreating after good gains in the previous session as crude fell below $81 a barrel.

BG Group, Royal Dutch Shell and Tullow Oil shed 0.2 to 1.5 per cent, not helped by Budget news that planned increases in UK fuel duty will continue for one year from 2014. But peers BP and Cairn Energy added 0.4 and 0.7 per cent, respectively.

Miners were higher as a sector, with Rio Tinto, Antofagasta and Kazakhmys up 0.1 to 1.4 per cent, while Anglo American, ahead 0.9 per cent, was supported by a JPMorgan upgrade to “overweight”.

Eurasian Natural Resources added 0.6 per cent as the Kazakh-based firm was upbeat on 2010 after posting a drop in 2009 profit.

Banks also notched up sectorial gains. Lloyds Banking Group and Royal Bank of Scotland stood out, up 1.9 and 1.0 per cent each, aided by Darling’s comments that the government would sell shares in the two part-nationalised banks in a way that recoups the money invested.

Lloyds shares were also supported by BofA Merrill Lynch adding it to its Europe 1 List and hiking its price target.

But global banking heavyweight HSBC lost 0.2 per cent as worries about possible debt exposures shifted to Portugal after agency Fitch lowered its debt rating for the country to AA- from AA, with a negative outlook.

Pharmaceutical stocks also provided a lift for the blue chips, with heavyweights AstraZeneca and GlaxoSmithKline gaining 0.6 and 0.7 per cent, respectively.

Peer Shire firmed 2.1 per cent as ongoing manufacturing problems at US rival Genzyme boosted prospects for its enzyme replacement treatments. Among individual blue chips gainers, Smiths Group took on 1.5 per cent after the technology firm defied tough trading conditions to report a 12 per cent increase in first-half profit on cost cuts.

Plumbing supplies group Wolseley was a big blue chip loser, down 2.3 per cent as UBS cut its rating to “neutral” from “buy” following recent half-year results. A broker downgrade also weighed on Johnston Matthey, down 1.6 per cent as BofA Merrill Lynch cut its rating to “neutral” citing valuation grounds.