Britain's leading share index ended up 1.2 percent on Thursday, rallying late on with Wall Street and as rising crude boosted heavyweight oil stocks. The FTSE 100 was 46.94 points higher at 4,087.83 at the close after a volatile session, having swung between a high of 4,108.36 and a low of 3,927.57. The UK benchmark fell 5.6 percent over the previous two sessions and is down more than 38 percent for the year.
"There is a real sense of traders testing the levels here," said Felix Riley, head of Binaries at financial bookmakers ChoiceOdds. "People don't want to be forced sellers, but volumes are thin and the most modest of trading is swinging the market erratically," Riley added.
Energy stocks provided the main strength for the FTSE, with the sector recovering from earlier falls as crude prices rallied by over $3 a barrel ahead of Friday's Opec meeting, with production cuts expected. BP, Royal Dutch Shell, BG Group Cairn Energy and Tullow Oil were up between 0.7 and 5.2 percent.
Market heavyweight Vodafone also gave the index a boost, up 4.8 percent as the mobile phone operator attracted some bargain-hunting after a recent sell-off. Drugmaker GlaxoSmithKline advanced 1.6 percent after Wednesday's well-received third-quarter results.
The company stepped up its drive to acquire more biotech assets by buying the rights to an Austrian firm's experimental therapeutic vaccines against Alzheimer's disease. Peers AstraZeneca and Shire were also in demand thanks to the sector's defensive nature, with AstraZeneca helped too by an upgrade in rating by Exane BNP Paribas.
Weak metal prices weighed on heavyweight miners, with BHP Billiton, Anglo American, Rio Tinto, Xstrata, Lonmin and Antofagasta all losing between 2.7 to 9 percent. BHP reiterated that short-term demand was faltering in China, but said longer-term prospects were intact for the country to expand its appetite for raw materials.
Rio Tinto also said it had cut its outlook for Chinese economic growth in 2009, to 8-9 percent, but expects commodity prices to bounce back some time next year. Banks took a battering again. Switzerland's Credit Suisse said it had further cut its exposure to illiquid US assets as it confirmed a hefty third-quarter loss, but warned the rest of the year would be tough.
Standard Chartered, HBOS, Barclays and Royal Bank of Scotland shed between 1.9 and 4.9 percent. Most retailers suffered too. Next lost 2.7 percent, Kingfisher 1.5 percent, with mid-caps Debenhams and Home Retail off 12.3 and 6.0 percent respectively. DSG International bucked the trend, however, adding 8.5 percent as comments easing concerns about its bank covenants offset news trading conditions had got worse.
British retail sales growth slowed to its weakest in 2-1/2 years in September. "Tomorrow's (UK) GDP figures will be closely watched by many but expectations are for this not to exactly make pretty reading with the country seemingly on course for a recession," said David Fineberg, a dealer at CMC Markets. "However this threat of recession both at home and overseas is going to impact earnings and with it the appetite for stocks is likely to remain depressed for some time yet," Fineberg said.
Comments
Comments are closed.