Market report: Friday close
Dire predictions on the economy may abound, but the Bank Holiday spirit sent traders on a shopping spree today.
Traders: Latest news from the stock market
Despite figures showing that growth ground to a halt in the second quarter of the year and economists are making miserable forecasts on the future for equities, investors shrugged off the gloom as they bet on interest rates cuts in the coming months.
The benchmark FTSE 100 rose by 135.4 points, more than 2% on the day, to close at 5505.6. Trading screens were covered in blue, with only 11 losers in the top flight, and shares received a further fillip from investors closing short positions before the long weekend.
Over on Wall Street, the mood was equally cheery, with the Dow rising 135.6 to 11,565.8.
Today witnessed a major reversal of recent fortunes among blue-chips, with financial stocks boosting the top tier and commodity stocks giving in to profit taking.
Life insurer Legal & General was the most-traded stock, a spot almost invariably taken by mobile phone giant Vodafone, with over 56 million shares changing hands as it announced that its half-year results had been submitted to the UK Listing Authority. Its shares gained 3.90p to 99.10p. Other financials were up strongly with RBS 11¼p higher at 220¾p and Lloyds TSB climbing 19½p to 299½p.
Meanwhile oil and mining stocks came off the boil, with Eurasian Natural Resources the biggest casualty of the day, sinking 29p to 1033p, despite upbeat broker comments, while explorer Tullow dived 3p to 796½p.
But property stocks hogged the limelight as speculators bet a bid could be in the offing for commercial property group Liberty International.
US malls developer Simon Property, the largest publicly-listed American real estate firm, said it has increased its stake in the company to 3.45%, in what traders interpreted as a sign it may be weighing up making an offer.
Rumours of a possible bid were fuelled by talk that Simon's balance sheet is looking a lot healthier than its rivals and investors noted it has been acquisitive in the past, snapping up rival American arcades builder Mills.
Alongside its peers, Liberty's shares have been mauled in the past few months after it was forced to write down the value of its property portfolio, which includes the Covent Garden Piazza and shopping centre Lakeside.
But it raced to the top of the Footsie leaderboard, surging 70p to 945p.
Rival British Land was also better, adding 2.1% as investors digested news that the real estate arm of the government of Singapore has upped its stake to just over 5%. Its shares soared 44p to 751½p.
Bookmaker William Hill, the victim of a string of broker downgrades this week, was again out of favour. This time it was UBS dealing the blow, slashing its target price for the betting shops chain from 300p to 250p and warning over the impact on earnings of the cancellation of 13 horse race meetings this month.
While a waterlogged track at York's Ebor Festival may have left northern racing devotees feeling starved of action, it was even worse news for William Hill, which is estimated to have taken a £20m hit to earnings from its abandonment alone.
UBS again told clients to sell, but punters ignored the advice and its shares put on 15¾p to 282½p.
Benfield Group, the reinsurer which has attracted Aon's advances, wasn't the only stock benefiting from news of a bid. IT training tiddler Xpertise was the biggest winner among Aim stocks after receiving a 150p-a-share offer from private-equity backed rival QA-IQ.
The move values the group at £8.7m and sent its shares rocketing by over 85% to trade 65½p higher at 142½p.
TUESDAY'S AGENDA
• Mining giant Rio Tinto is expected to deliver stellar first-half results on the back of a sharp rise in the price of metals. Analysts at brokering forecast the company, which is still being pursued by rival BHP Billiton, will report a 51% jump in underlying earnings.
• Bovis Homes continues what analysts have warned will be the grimmest reporting season in two decades for the nation's housebuilders. Rival Persimmon, the bellwether of the sector, kicked off proceedings yesterday by reporting an 87% drop in profits for the first six months of the year.
• More gloomy news on the state of the housing market is forecast with the release of July's mortgage approval figures from the British Bankers Association. Last month, the group said approvals for home purchases had fallen to the lowest level ever recorded as first-time buyers were driven out of the market.
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