UK banks drive cautious gains ahead of European Central Bank
LONDON: London equities traders turned their attention to Frankfurt on Thursday in the hope that the European Central Bank would extend its bond purchase scheme to soothe strained sovereign credit markets.
Financial stocks continued to recover on hopes of news of further stimulus measures after the ECB's monetary policy meeting ends later in the session.
Among the sector's best performers, Royal Bank of Scotland rose 0.7 per cent to 40.2p, while Lloyds Banking Group was 1 per cent higher at 64.6p.
Barclays bucked the trend after news it was among the biggest users of the emergency credit facilities provided by the Federal Reserve at the height of the financial crisis. Shares in Barclays were 0.8 per cent weaker at 265.9p.
Resource stocks also remained in demand after the strong manufacturing data over the previous session left them looking undervalued following November's steep sell-off. Adding important support for the market's vulnerable advance Rio Tinto was the best single performer on the FTSE 100, rising 2.5 per cent to £43.13.
Overall, London's benchmark index was 0.2 per cent higher at 5,654.01, a gain of 11 points. It came after the best one-day gain in three months during the previous session, after stronger UK manufacturing data than forecast added to the ebullient mood generated by strong Chinese data.
Britvic shares came under heavy pressure as investors looked disappointed with the size of its dividend. The soft drinks maker lifted its final pay-out by 111.3 per cent to 12p per share, but hopes for a bigger increase were left unfulfilled. The stock lost 7.9 per cent to 38.9p.
Rolls-Royce fell 1.2 per cent to 611p as the problems with its engines on Qantas's Airbus A380 super jumbos continued to haunt the stock. The Australian airline was reported to be considering suing the Derby-based engineer unless the two parties reached a deal over the mounting costs of the problems on its fleet. Kingfisher, parent company of the B&Q home improvement stores, rose 0.8 per cent to 239.7p after its third-quarter numbers were not as bad as some analysts had feared. Retail profit at the company rose 5.9 per cent.
Caroline Gulliver, analyst at Execution Noble, said: "Kingfisher's 3Q results are overall in-line with expectations. the long-term growth opportunities at Kingfisher remain strong." But there were growing concerns about the potential impact of the bout of severe weather in the UK on the peak Christmas shopping season, leading to pressure on retail and leisure stocks.
"The concern for retailers, restaurants, bars and hotels is that this could seriously hit their trade in their most important time of the year," said Howard Archer at IHS Global Insight. - PB News
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