FTSE gains after commodity rally and flurry of M&A bids
BRITAIN’S leading shares pushed higher yesterday, led by rallying commodity stocks and banks as investors awaited a vote of confidence in the Greek Parliament.
The vote, due after the London market close, is seen as a key step towards the passage of more spending cuts in exchange for foreign emergency loans.
“What equity markets need is a bit of good news or even some relief from the sheer dreariness of the Eurozone’s sovereign debt crisis and Greece’s financial odyssey,” said Mike Lenhoff, market strategist at Brewin Dolphin.
“A vote of confidence for Mr Papandreou and his government might be the catalyst that helps equity markets to regain their footing,” he added.
At the close, the FTSE 100 index was up 81.92 points, or 1.4 per cent at 5,775.31, recovering the previous session’s losses, although trading was thin, at just 68 per cent of the average 90-day volume.
Energy issues were the top blue chip sector gainers as crude prices rose, with BG Group ahead 2.7 per cent.
BP added 3.7 per cent after Weatherford, which provided equipment used in the Macondo oil well, agreed to pay $75m (£46m) toward the cost of the Gulf of Mexico spill.
Miners also rebounded as metal prices ticked up, with Chilean copper miner Antofagasta ahead 5.1 per cent and Fresnillo up 4.7 per cent.
Outside the top flight, gold miner Petropavlovsk gained 7.6 per cent on the back of strong production figures.
Banks lent their strength to the blue chip index as well, with Barclays up 2.5 per cent, while global heavyweight HSBC added 0.9 per cent.
Whitbread was the top FTSE 100 gainer, up 6.9 per cent after Britain’s biggest hotel and coffee shop operator said its London operations had performed strongly in recent weeks.
Cruises operator Carnival got a boost from better-than-expected second-quarter results, adding 6.0 per cent.
Wolseley rose 4.3 per cent as ING upgraded its rating for the building supplies firm to “buy”.
FTSE 250-listed software firm Misys rose almost nine per cent after it announced that it had received a bid approach.
On the downside, brewer SABMiller was the top blue chip faller, down 3.6 per cent after rival Australian firm Foster’s Group rejected its A$9.5bn cash takeover offer.
Defensively-perceived water blue chips were also weak, with United Utilities down 0.8 per cent, as Goldman Sachs cut target prices and estimates in a sector review.
“The rotation into defensives in Europe may have been a feature of last week … We favour the non-cyclicals until sovereign risk abates, the manufacturing data turns and Chinese inflation peaks,” said strategists at RBS in a note.
Domestic macroeconomic news was mixed. British factory orders were stronger than expected in June, but Britain ran up a record budget deficit in the first two months of the fiscal year.
But US data was supportive, with a smaller than expected decline in May existing home sales helping US blue chips add one per cent by London’s close.