INTEGRATED oil and property stocks helped Britain’s top shares end higher yesterday, when gains were limited by weaker banks after Standard & Poor’s warned a potential Greek debt deal would amount to a default.
The FTSE 100 index rose for a seventh straight day, adding 27.78 points, or 0.5 per cent, to 6,017.54, closing above 6,000 for the first time since mid-May.
With US markets closed for Independence Day, volume on the FTSE 100 was only 52 per cent of the 90-day average.
Integrated oil stocks added the most points to the blue-chip index, despite a steadying crude price/
BG Group was up 0.8 per cent as HSBC became the latest broker to lift its target price for the company which last week doubled its estimate of its share of reserves in Brazil.
Peer Royal Dutch Shell climbed one per cent as Goldman Sachs said the firm, likely to be supported by strong second-quarter results, remains one of its top two picks in the integrated oils sector.
Oil explorer Cairn Energy shed 3.3 per cent. It was the heaviest FTSE 100 faller following a JPMorgan target price cut, after the deal to sell a stake in its Cairn India unit to Vedanta was repriced last week.
British Land was up 2.3 per cent, as Deutsche Bank recommended that investors buy shares in the blue-chip real estate group in anticipation of strong net asset value growth.
Bullish broker comment also helped temporary power provider Aggreko, up 1.9 per cent, with Citigroup lifting its target price and earnings forecasts, praising its strong performance and pipeline.
Imperial Tobacco climbed 1.2 per cent after lifting prices across its Spanish cigarette portfolio broadly to pre-price war levels, prompting Citigroup to raise its earnings estimates and target price.
Elsewhere, banks fell after last week’s heady gains as credit rating agency Standard & Poor’s warned Greece would likely be in default if it followed a debt rollover plan promoted by French banks.
Lloyds Banking Group was the worst sector performer, off 1.8 per cent, followed by Royal Bank of Scotland, down 1.5 per cent, as investors fretted the Eurozone debt crisis is far from over.
“My feeling is that with the short-term resolution on Greece, and the payment likely to be made, we did have a relief rally last week. Whether it continues, I think the market is fairly sceptical on that,” Martin Dobson, head of trading at Westhouse Securities, said.
Traders said Friday’s release of June US non-farm payrolls will be monitored since investors are keen to put to one side remaining worries that the US economy has struck a soft patch.
Some of last week’s US data offered cause for optimism, with equity markets receiving a fillip after a forecast-beating ISM manufacturing survey, which built on surprisingly strong regional business data.
But “one swallow does not make a summer”, said Michael Hewson, market analyst at CMC Markets.
“That’s just typical of these markets – they cherry-pick the data they want to see. I’m not saying it’s wrong, but it highlights the fickle nature of markets.”
“What I would like to see is a good payrolls report, and I have a feeling that we’re lining ourselves up for a bit of a disappointment on that.”