Yesterday's Trading: Markets climb off the canvas
Vikram Pandit sat proudly in the winning enclosure after sprinting out of the stalls with an upbeat statement about current year trading at his beleaguered US bank Citigroup.
Geoff Foster: Rounding up all the action on the stock exchange
In a 'leaked' internal memo to staff, the chief executive said that the first-quarter had been the bank's most profitable since the final three months of 2007 and he was confident about its capital strength.
Dealers had to pinch themselves that they were not dreaming and that the market had at last some bullish news to chew on for a change. Heavyweight bears rushed to close their hefty short positions.
So only days after every man and his dog was talking the Footsie down to 3,000, it found itself trading 183 points higher before closing 172.83 points, or 4.9%, up at 3,715.23. The FTSE 250 rose 185 points to 5,954.8.
Pandit's comments certainly galvanised Wall Street. It shrugged off Federal Reserve chairman Ben Bernanke's now boring comment that the world is suffering from the worst financial crisis since the 1930s and soared 379.44 points to close at 6926.49. Citigroup's shares jumped 20%.
Helping the mood in London too was Jonathan Pierce, analyst at Credit Suisse, saying that value is emerging in the UK bank sector.
Indeed, he is now of the opinion that UK banks are once again investable. Barclays, 6.1p better at 67½p, is the most interesting and he upgraded to outperform with a target price of 110p.
Lloyds Banking Group, which will soon be 77% owned by the government, rallied 7.1p to 50.8p, while 95%-owned Royal Bank of Scotland improved 2p at 21p. HSBC jumped 50p to 399p.
Insurers bounced back strongly on receding
worries about their exposure to risky assets or corporate bonds. Prudential rebounded 43½p to 250½p, Friends Provident 11.3p to 66.1p, Standard Life 26.1p to 157.9p and Legal & General 3.7p to 26.7p.
Close Bros jumped 39½p to 532p following interim results which featured a strong performance by top market-maker Winterflood Securities.
Group profits may have fallen 45% to £38.5m but that was no fault of WINs which turned in a stonking 39% profits increase to £33.2m. It is trading much better than many rivals because several of its competitors have disappeared and London Stock Exchange SETs volumes have increased significantly. Tullett Prebon (up 35.2p at 171½p) is cashing in on the volatility that has plagued the rest of the financial sector.
The group, which acts as the middleman between banks selling foreign exchange, bonds and interest rate products, beat expectations after posting a 36% rise in annual pre-tax profits to £155.4m.
Buying in anticipation of its expected promotion to the Footsie today helped platinum mining giant Lonmin rise 138p to 1216p.
Packaging paper manufacturer Mondi rose 30¾p to 151½p on talk of a pending broker's circular.
Shares of Imperial Tobacco were puffed 87p higher to 1657p by a Citigroup upgrade to buy. The broker reckons the stock is oversold, considering its robust business model and cash flow. There is little chance of a dividend cut.
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Down 40% this year, Tate & Lyle rallied 11p to 240½p after Bank of America/Merrill Lynch upgraded to neutral from sell.
The broker has pencilled in a final dividend of 17p, which alone provides a yield of 7.5%.
Consultancy engineer Amec rose 29½p to 540½p on hopes that tomorrow's full year results do not contain any nasty surprises.
Construction company Costain eased ¼p to 22½p ahead of today's prelims. Panmure Gordon is a seller, reflecting uncertainty in the Spanish development market, UK Building performance and other international legacy issues.
Director buying and hopes it will clean up at the Cheltenham Racing Festival this week helped bookie Ladbrokes canter 6p forward to 180½p. Rival William Hill closed lengths ahead at 231¼p, up 11.2p. A Shore Capital recommendation helped Paddy Power put on e0.35 at e12.36.
After warning that trading conditions have deteriorated since December interims, support services group Scott Wilson plunged 20½p to 50¾p. The company has seen pressure on margins. Panmure Gordon downgraded to hold from buy and slashed its target price to 77p from 130p.
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