FTSE 100 close: Ninth day of gains for UK shares

By Adrian Lowery
Updated: 12:11 EDT, 23 July 2009

The Footsie shot through the 4,500 barrier this afternoon after US stocks were boosted by upbeat property data and more good earnings news.

Sales of previously owned homes in the United States rose at a faster-than-expected 3.6% in June, adding to the stock of upbeat economy data there. Meanwhile, AT&T, Ford, eBay and 3M all cheered the market with their figures.

The resulting hundred-point rise for the Dow Jones industrial average on the open gave the FTSE 100 a lift, to extend its longest winning streak in more than five years, with what looks like being a ninth day of gains.

The index - having been down most of the day - closed 66.1 points ahead at 4,559.8.

'So far, so good; expectations have been eclipsed and there is no doubt that there is hope for the future with investors happy to increase their appetite for risk,' said David Buik, markets analyst at BGC Partners.

Miners were propping up the market today, taking up the top ten places on the risers' board. Fresnillo led the way with a 44p hike to 634p. Kazakhmys put on 70.5p to 811p and Eurasian Natural Resources rose 70p to 860p.

Water utilities were the sharpest blue-chip fallers after water regulator Ofwat said it plans to cut water bills over the next five years and allow companies to make a return on their capital at the low end of expectations.

Severn Trent was 81p worse off at 1,032p, United Utilities fell 23.25p to 479.25p and Pennon Group was 17p down at 490.5p.

Compass fell 7.5% or 26.5p to 326.25p after the world's biggest caterer said sales growth will slow further in the fourth-quarter after third-quarter sales were hit by the recession.

Merrill Lynch nevertheless reiterated their 'buy' recommendation.

Shares in National Express rose 13.75p to 324p after it said it had received a fresh takeover approach.

National Express has been vulnerable to takeover after it was frozen out of the rail business by the Government after being stripped of its East Coast franchise. It has already rejected a takeover approach from rival First Group – static at 14.75p.

Analysts have speculated that the suitor could be fellow UK transport group Stagecoach (3p higher at 135p), as well as European operators or private equity players.

'I imagine a lot of people are looking at National Express -- there are not a lot of assets of that scale around right now,' Investec analyst Joe Thomas told Reuters, referring to the firm's bus operations in the UK, North America and Spain.

Better-than-expected trading at B&Q in the UK failed to inspire shares in retailer Kingfisher, which fell 1.7% or 3.5p to 209.5p.

Directories firm Yell provided the biggest rise in the FTSE 250 Index after its first-quarter trading update included revenues and earnings figures slightly ahead of its previous guidance. With Yell also reducing its debt pile by £400m to £3.8bn, shares rallied 24.2% or 5.5p to 28.25p.

Sugar firm Tate & Lyle followed close behind Yell after it said first quarter pre-tax profits were ahead of its expectations. Recent cost-cutting efforts were also starting to bear fruit, according to the group, and shares rose 27.5p to 339p.

In small caps, shares in International Personal Finance jumped more than 14% after the emerging markets lender said it made a strong recovery in the second quarter despite posting a 65% slump in first-half profits.

Broker WH Ireland said the results came in ahead of its forecasts and upped its recommendation to 'buy' from 'market perform'.

TOMORROW'S AGENDA

• Official gross domestic product figures are released, revealing the extent of the contraction in the UK economy in the second quarter. In the first three months of this year, GDP plunged by 2.4%. The National Institute of economic and Social Research is expecting a 0.4% decline this time, followed by a 0.1% contraction in the third quarter - the sixth consecutive fall. The leading think tank reckons that there will be no return to growth until 2013.

• Vittorio Colao, chief executive of Vodafone, will be grilled on how serious the mobile-phone giant is about buying T-Mobile's UK arm, when the company updates the market on trading. Owner Deutsche Telekom is considering putting it under the hammer, although a deal might be blocked by regulators as it would give Vodafone a 40% share of the market.

The company is also expected to provide an update on its cost-cutting plans. Sector watchers warn that further staff cuts may be announced after Vodafone slashed 1,800 jobs last year. Vodafone is looking to reduce its costs by £1bn by March next year. Ex-house broker UBS is advising clients to dump the shares in the short run, warning that revenues are likely to come under pressure in its european businesses, falling 5.5% in the quarter.