Libya ceasefire soothes markets

A ceasefire by Colonel Gaddafi’s forces in Libya has helped energy companies and spurred the markets on to a positive close, with the FTSE 100 closing 0.4 per cent up at 5,718.13.

Political news dominated the day as G7 governments pulled together to support Japan’s efforts to stabilise its currency the yen.

Central banks intervened to buy dollars and sell yen into the markets to prevent it strengthening further.

Japan’s benchmark Nikkei stock index rallied while the yen weakened on the efforts.

Libya also remained a defining influence with western governments including Canada and Denmark pledging fighter planes and assistance to support air strikes on Gaddafi’s forces today after the UN Security Council voted to intervene in the crisis last night.

Gaddafi’s declaration of a ceasefire helped markets though governments voiced scepticism as to whether the leader would act on it.

CMC Markets analyst Michael Hewson said the news “was given a cautious welcome by markets and now we have to see whether the deeds match the rhetoric.”

The biggest riser was the National Grid, up 4.4 per cent to 577p after Ofgem, the regulator, published details of its new pricing structures, saying it would control the cost of renewable energy and promote new infrastructure for the electricity and gas grids.

BG owner Centrica added 3.2 per cent to end at 328.5p, while Scottish & Southern Energy finished up 2.4 per cent at 1,234p, although BG Group gave up 1.4 per cent and closed down at 1,499p.

Companies that service energy firms also benefited, with Petrofac rising 2.2 per cent. Peer Amec added 1.5 per cent, also supported by Investec Securities initiating coverage of the stock with a “buy” rating.

Hewson added that “Barclays is lower after being subpoenaed by regulators as part of a probe into Libor manipulation by a number of banks.” Barclays closed down 0.5 per cent at 282.1p.

ARM Holdings fell most, down 4.2 per cent at 511p, with traders pointing to a note from Matrix that recommended reducing holdings of the designer of chips. Analysts also said Japanese supply problems after last week's massive earthquake there made it vulnerable.

According to Thomson Reuters data, ARM trades on more than 50 times forward earnings, compared with a sector average of around 25 times.

On the FTSE 250, fund manager Jupiter fell 6.4 per cent to 298p after reporting year-end results below market expectations despite raising operating profit 48 per cent to £77.3m.

Traders said bargain hunters would be seeking out further opportunities while the market remained oversold.

“The Sunday papers will almost certainly be sifted through thoroughly, as investors look to see beyond the headlines in the search of a bargain. This aside, the hazardous volatility looks like it will remain a feature of daily market-life for some time,” said IG Index sales trader Will Hedden.