Market round-up: G20 deal drives up Footsie

By Philip Scott
Updated:

 

The Footsie has finally pushed back through the 4,000 barrier in a week that enjoyed some positive economic news and an historic deal struck at the G20 summit. Philip Scott rounds up the stock market week.

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The FTSE 100 index of the UK's largest firms finally pushed through the 4000 barrier this week, thanks in part to the deal agreed at this week's G20 summit in London.

The historic $1trillion (£683bn) deal to boost the global economy was confirmed on Thursday at the London summit.

The money will be used to drive growth and stabilise struggling economies. There was also a move to toughen up regulatory rules, to 'give capitalism a conscience' and put a stop to the excesses responsible for the global crisis.

That, positive property market data from Nationwide and news from the Bank of England that the credit crunch may be easing, saw the Footsie surge through the 4,000 mark to close at 4,125.0.

But it gave up some gains on a lacklustre Friday to finish the week at 4029.67, representing a 3% boost over the open on Monday and 11% over the past month.

The blue-chip index is still 32% down over the past 12 months.

Most of the High Street banks enjoyed further share price growth this week, despite, two firms in particular feeling the discontent of shareholders.

Royal Bank of Scotland shareholders had the opportunity to have their voices heard following a disastrous year for the bank at its annual meeting yesterday.

The bank, 15% dearer at 30.6p, confirmed that its former boss Sir Fred Goodwin is considering a 'voluntary reduction' in his £703,000-a-year pension but also cautioned that further staff cutbacks were a possibility and that the 2,700 announced to date were 'not the end of the story'.

For its part Lloyds Banking Group, up 4% at 79.2p, rallied against further widespread criticism of the HBOS merger. Lloyds TSB investors are still seething over the axing of the firm's historically high dividend and the fall in the group's share price.

HSBC's rights issue, which closed yesterday morning at 11 am, the level of take-up by shareholders will be announced by 8 April. The shares have opened on Friday morning, slightly down at 440p. The rights issue price of 254p represents approximately a 42% discount to Friday morning's price. The bank finished the week up 8% after closing at 434½p.

But Barclays shed 2% to 170.4p. City sources believe a £3bn deal for its iShares division, its exchange traded fund business, is imminent.

Alistair Darling's last minute decision to slash the planned 5% increase in business rates to 2% proved a welcome respite for retailers. Better than expected sales figures from Marks & Spencer helped boost sentiment too. Over the week it is a among the top 10 risers within the Footsie after jumping by 19% to 316p.

But it was Homebase owner Home Retail Group and B&Q parent company, Kingfisher which delivered the largest gains on the index after each put on 24% to close at 271¾p and 172½p respectively.

Next was ahead 18% to 1486p. In the FTSE 250, Debenhams is 7% more expensive at 55¾p following an upgrade from broker Citigroup.

But analyst, Chris Longbottom, of TNS Worldpanel has warned that it was too early to call a recovery. He said: 'The words we're using to describe consumers at the moment are prudent and cautious - even if they're secure in their employment, they are being careful.'

In addition, the struggling pound is pushing food and drink retailers in particular to pass on higher import costs, which is seeing prices for goods, such as vegetables, rocket. Unemployment, too, remains a serious concern and as the number of jobless could potentially increase from 2m to a staggering peak of 3.3m in the UK.

Pub groups Enterprise Inns and JD Wetherspoon gave optimistic updates this week. The former jumped a massive 62% to 94¾p while Wetherspoon rose 12% to 460p. Tour operators echoed the positive sentiment. Thomas Cook, up 12% to 265¾p, said trade had 'improved significantly' in the past four weeks.

Miners Kazakhmys and Xstrata enjoyed strong gains, firming 19% to 452p, and 13% to 538½p respectively. The UK's biggest life insurer, Aviva, announced that it planned to slash some 1,690 jobs in the UK as part of a three-year efficiency drive. The move hasn't hurt its share price which is up 6% to 251½p.

Competitors Prudential pushed up 13% to 370¼p while Standard Life edged ahead by 4% to 179p and Friends Provident put on 4% to 72.2p.

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Losses among the blue chips were endured by miner Fresnillo, down 6% at 443p and Harmony Gold Mining Company - the largest faller with a 10% drop to finish at 713p. Oil refiners also dropped back, with Tullow Oil down 3% at 790p, BP was 4% lighter at 457½p and Royal Dutch Shell was off 3% at 1547p.

Centrica, down 2% at 221¾p, is locked in talks with French utility group EDF were today over the planned sale of a 25% stake in nuclear generator British Energy. Reports have said that the recent sharp fall in electricity prices meant that Centrica was feeling the heat from shareholders not to overpay.

Next week sees finals arrive from X5 Retail Group on Tuesday, followed by Panmure Gordon & Co. on Wednesday and domestic goods group Walker Greenbank on Thursday. Rio Tinto, holds its agm on Wednesday while comparison site, Moneysupermarket.com holds its annual meeting on Thursday.

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