Leading British shares scored their highest close in two weeks on Wednesday, boosted by solid earnings reports from companies such as Reuters and Northern Rock.
Britain's eighth-biggest listed bank Northern Rock topped the leader board with a 7.8 percent gain after it posted a 14-percent jump in underlying first-half profit and raised its target for future profit growth to 20 percent from 15 percent.
News and information group Reuters rose 5.1 percent after it lifted its 2006 revenue growth outlook and raised its dividend for the first time in five years.
The FTSE 100 closed 25.9 points higher at 5,877.1, its highest close since July 10 and bringing its gains to 157 points over the past three days. Volume, however, was moderate at 2.4 billion shares.
Graham Secker, UK equity strategist at Morgan Stanley, said markets were still keeping a wary eye on interest rates and inflation along with the situation in the Middle East, although the UK earnings season was giving the FTSE a lift.
"The reporting season looks like it's coming in pretty good again so there's a bit of a tug of war going on between positive and negative factors," Secker said.
"It's a quiet summer day. I wouldn't read very much into it at all. We've had a few big individual stock moves on the back of results which again tells us that expectations in the markets are not that high: You get good results and the stock does move," he added.
Britain's fifth-biggest energy supplier Scottish Power was 1.5 percent higher after it said the new financial year was off to a good start and trading across the group was in line with expectations. The UK earnings season hits top gear on Thursday and dealers said investors were hoping to see the recent spate of positive news continue as a counterweight to worries that the violence in the Middle East will get worse.
Of the companies reporting results on Thursday, oil major Royal Dutch Shell, gas utility Centrica, drugs giant AstraZeneca and medical devices company Smith & Nephew put on up to 3 percent.
Traders said Smith & Nephew was additionally boosted by renewed bid speculation. Smith & Nephew shares have in the past been subject to talk of possible bid interest from US firm Bristol-Myers Squibb, although the British company has previously played down talk of consolidation among big companies in the orthopaedics industry.
Swiss-based diversified miner Xstrata gained 0.5 percent after its hostile bid for Falconbridge won approval from Canadian authorities, clearing the last crucial regulatory hurdle needed as it battles with Inco for the nickel and copper producer.
Analysts said a successful bid for Falconbridge would boost Xstrata's profits.
Shares in Europe's biggest pharmaceutical group GlaxoSmithKline finished 1.5 percent lower after the company edged up its 2006 earnings forecast but said there were several reasons to be a little conservative about the second half.
The shares started out the day in positive territory after the company said a bird flu vaccine for human victims, which requires only a very low dose of active ingredient, had proved effective in clinical tests.
GSK is on track to start making the vaccine in commercial quantities by the end of the year. Online gambling stocks were also pushing higher after comments from aides to Republican leaders on Tuesday that a bill to ban most forms of the business in the United States was unlikely to win US Senate passage before a month-long recess begins on August 4.
PartyGaming rose 3.1 percent, 888 jumped 8.4 percent and Sportingbet gained 6.8 percent. But stocks trading without the right to the latest dividend payout weighed slightly on the index, with Yell falling 1.5 percent and ICAP down 3.4 percent.
Among mid-caps, Colt Telecom added 5.6 percent after Goldman Sachs raised its investment rating on the stock to "neutral" from "sell".
Comments
Comments are closed.