LONDON: Strength in risk-sensitive energy, miners and banking stocks propelled Britain�s top share index back up to touch the 5,700 level on Monday, fuelled by hopes central banks could launch fresh measures this week to stem the global economic slowdown.
Recent comments from European policymakers vowing to take all steps to tackle the euro zone sovereign debt crisis, as borrowing costs for under-pressure Spain and Italy have soared, have heightened speculation of European Central Bank action.
The ECB has been hinting, hinting, hinting but now it's the time to deliver, said Henk Potts, market strategist at Barclays Wealth.
If they don't do something concrete at Thursday's meeting the markets are going to see some hefty falls. There are no in-between measures this time, if the central bankers fail to deliver there is nothing else to underpin the market, Potts added.
The biggest support for the blue chips came from the energy and mining sectors, which rose on hopes that expected central back action would lift the gloom surrounding the global economy and boost demand for commodities.
The FTSE 100 index closed up 66.42 points, or 1.2 percent at 5,693.63 points, just holding below the 5,700 level breached intraday for the first time in 10 days, though volume was modest at 69 percent of the 90-day daily average.
�Overall, volumes were rather low today as the summer season kicks off and Olympic Games are in full swing. We can expect continued volatility heading into August, together with some position squaring,� said Ishaq Siddiqi Market Strategist at ETX Capital in a note.
Banking shares were higher on hopes for central bank action, as lenders are big holders of euro zone debt, and as the sector�s first-half results season was continued by global giant HSBC, shares in which gained 2.3 percent in strong volume at 120 percent of its 90-day daily average.
Europe�s biggest bank reported a 3 percent dip in underlying profit and said it had made a provision of $700 million to cover �certain law enforcement and regulatory matters� after a US Senate report this month criticised HSBC for letting clients shift funds from dangerous and secretive countries.
Peer Barclays - which posted well-received first-half results on Friday as it said it faced fresh lawsuits over its role in a Libor rate-fixing scandal - gained 2.1 percent, helped by a broker update.
Societe Generale raised its rating for Barclays to buy from hold and increased its target price to 190 pence from 170 pence, citing a firmer commitment by the lender to control costs in its investment banking business.
As investor focus switched to stocks generally perceived as more risky, defensive plays were the main blue chip fallers.
Food retailers were among the worst off, with Tesco and J. Sainsbury both down 0.8 percent.
Publishing group Pearson was the biggest individual blue chip faller, losing 3.3 percent, weighed down by a hangover from an earnings disappointment on Friday.
On the second line, electrical retailer Dixons was a good performer, adding 4.2 percent with traders citing the impact of an Olympics boost for the sale of televisions mentioned by department stores group John Lewis in its weekly sales figures last Friday.
Other high street retailers were under pressure, however, after a survey by the Confederation of British Industry on Monday showed British retail sales rose in July more slowly than stores had expected, dented by unusually rainy weather.
The CBI distributive trades survey�s July sales balance fell to +11 from an 18-month high of +42 in June. Analysts had forecast a fall to +15.
Blue chip clothing retailer Next shed 0.4 percent, with the firm due to issue a trading update on Wednesday.�Reuters
Recent comments from European policymakers vowing to take all steps to tackle the euro zone sovereign debt crisis, as borrowing costs for under-pressure Spain and Italy have soared, have heightened speculation of European Central Bank action.
The ECB has been hinting, hinting, hinting but now it's the time to deliver, said Henk Potts, market strategist at Barclays Wealth.
If they don't do something concrete at Thursday's meeting the markets are going to see some hefty falls. There are no in-between measures this time, if the central bankers fail to deliver there is nothing else to underpin the market, Potts added.
The biggest support for the blue chips came from the energy and mining sectors, which rose on hopes that expected central back action would lift the gloom surrounding the global economy and boost demand for commodities.
The FTSE 100 index closed up 66.42 points, or 1.2 percent at 5,693.63 points, just holding below the 5,700 level breached intraday for the first time in 10 days, though volume was modest at 69 percent of the 90-day daily average.
�Overall, volumes were rather low today as the summer season kicks off and Olympic Games are in full swing. We can expect continued volatility heading into August, together with some position squaring,� said Ishaq Siddiqi Market Strategist at ETX Capital in a note.
Banking shares were higher on hopes for central bank action, as lenders are big holders of euro zone debt, and as the sector�s first-half results season was continued by global giant HSBC, shares in which gained 2.3 percent in strong volume at 120 percent of its 90-day daily average.
Europe�s biggest bank reported a 3 percent dip in underlying profit and said it had made a provision of $700 million to cover �certain law enforcement and regulatory matters� after a US Senate report this month criticised HSBC for letting clients shift funds from dangerous and secretive countries.
Peer Barclays - which posted well-received first-half results on Friday as it said it faced fresh lawsuits over its role in a Libor rate-fixing scandal - gained 2.1 percent, helped by a broker update.
Societe Generale raised its rating for Barclays to buy from hold and increased its target price to 190 pence from 170 pence, citing a firmer commitment by the lender to control costs in its investment banking business.
As investor focus switched to stocks generally perceived as more risky, defensive plays were the main blue chip fallers.
Food retailers were among the worst off, with Tesco and J. Sainsbury both down 0.8 percent.
Publishing group Pearson was the biggest individual blue chip faller, losing 3.3 percent, weighed down by a hangover from an earnings disappointment on Friday.
On the second line, electrical retailer Dixons was a good performer, adding 4.2 percent with traders citing the impact of an Olympics boost for the sale of televisions mentioned by department stores group John Lewis in its weekly sales figures last Friday.
Other high street retailers were under pressure, however, after a survey by the Confederation of British Industry on Monday showed British retail sales rose in July more slowly than stores had expected, dented by unusually rainy weather.
The CBI distributive trades survey�s July sales balance fell to +11 from an 18-month high of +42 in June. Analysts had forecast a fall to +15.
Blue chip clothing retailer Next shed 0.4 percent, with the firm due to issue a trading update on Wednesday.�Reuters
No comments:
Post a Comment