BRITAIN’S FTSE 100 share index closed slightly higher yesterday, as strong gains from banks offset weaker miners and optimism on corporate earnings outweighed Middle East political concerns.
Banks advanced by upbeat broker comment and hopes for further good earnings reports from the sector, and overall sentiment on equities remained fairly positive.
The FTSE 100 closed 2.11 points higher at 6,087.38 after it added 0.8 per cent on Wednesday, and is close to its highest since June 2008. It has gained 3.8 per cent this month.
Activity was fairly strong with volumes at over 125 percent of the average for the last 90 trading days.
Police in the Gulf island kingdom of Bahrain attacked demonstrators camped out in the capital yesterday, killing three, in a move to stifle pro-democracy protests inspired by similar movements across the region.
“The market is proving resilient to news in the Middle East which usually would have caused things to wobble more,” Keith Wade, chief economist and strategist at Schroders said.
Banks which continued their ascent from Tuesday when Barclays posted forecast-beating results.
Royal Bank of Scotland and Lloyds Banking Group, set to unveil full-year results next week, rose 3.8 per cent and three per cent respectively.
“The environment is very good, with low interest rates and big margins,” Wade said.
Evolution Securities added RBS to its “core buy portfolio”, saying it was a “clear beneficiary of potentially better trading conditions in retail and investment banking in the UK”, while Lloyds remained the broker’s “Top Conviction Buy” in the European banking sector.
Miners weakened as copper stumbled to three-week lows with inflation worries and the demand-stifling effect of prices near record highs keeping sentiment in check.
BAE Systems was the biggest faller down 4.2 per cent, after the defence contractor said it expected sales to fall in 2011 as the impact of defence cuts in the UK and the United States begin to hit home.
Investec Securities placed its “buy” rating for the stock under review.
Reed Elsevier was also pressured after its results, off 2.4 per cent, with Investec describing the publishing and information provider’s full-year numbers as “solid”, but saying there was “little in the statement to get excited about either way”.
Reed, which publishes scientific and academic information and runs the world’s biggest exhibitions business, said increased spending on product development and sales and marketing had been largely offset by cost-efficiency gains. The publisher added the bulk of its restructuring was now complete. The firm also said it expects a gradual recovery in sales and profit margins.
US core consumer prices rose at their quickest pace in more than a year in January while new claims for unemployment benefits rose last week, partially reversing the prior week’s hefty decline, dampening a rally in US stocks.
British factory orders improved more than expected in February and firms expected to put up prices at their fastest pace in two-and-a-half years, the CBI’s monthly industrial trends survey showed.
Technical indicators on the FTSE 100 point to some fairly strong support around the 6,000 level and slightly below, Nicole Elliott, technical analyst at Mizuho Corporate Bank said.