FTSE 100 close: Miners and oil boost shares

By This Is Money
Updated: 12:11 EDT, 24 August 2009

The Footsie closed just below the 4,900 mark today, having briefly moved beyond it to a 10-month high in morning trading.

Led by mining, commodity and financial stocks, the FTSE 100 Index rose 45.3 points to 4,896.2 for the day. The index has now rallied 42% from its low in early March.

In the US, the opening Dow Jones provided a boost to London shares as it rose strongly, gaining 54.9 points to stand at 9,560.8 by 12.00 EDT.

• 'FTSE 100 to rise above 5100'
• ANALYSIS: Will the rally last?

There was more good news for the bulls in the shape of two surveys on the British economy, released overnight, which added to the positive view of the recovery and helped the early surge.

UK business confidence has turned positive for the first time in two years, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

Meanwhile, British service sector firms see a pick-up in business in the coming months, but some expect profits to fall amid continued downward pressure on prices, a Confederation of British Industry survey showed.

'It looks like we're just going to keep riding this wave of positive sentiment,' said Philip Gillett, a trader at IG Index.

'Everyone seems to think its going to hit a top and come off but it just doesn't want to do it,' he added, citing the 5,000 level as the next milestone he expects the index to push towards.

Not all analysts were so keen to jump on the bulls' bandwagon though.

'Markets have been reflecting the government stimulus around the world and getting far too excited ... Not sure if this is going to be sustainable as we head up towards the (UK) bank holiday weekend,' said Justin Urquhart Stewart, director at Seven Investment Management.

'We have to be extremely careful of the market getting too carried away and investors losing track of valuations,' he said.

On the FTSE 100, oil producers were firmer as crude prices held around $74 a barrel.

Royal Dutch Shell rose 26.85p to 1,640p and Cairn Energy was 23p better at 2,623p, but BP lost 0.65p to 528.5p.

Miners, meanwhile, have played an important role in the market recovery. Today Kazakhmys saw a 5% rise or 53.5p to 980p, while BHP Billiton, also 100.5p stronger at 1,648.5p, and a 62.5p rise to 1,539p for Lonmin helped the sector to the top of the risers board.

Shares in financials also saw demand and they rose accordingly with Royal Bank of Scotland gaining 2.32p to 50.8p, Lloyds Banking Group 5.97p stronger at 107.97p, and Barclays adding 16p at 362.25p.

RBS and Lloyds Banking Group have set up subsidiaries that buy the properties taken over by the bailed-out banks, in a bid to stave off billions of losses that would be incurred if the repossessed assets were sold in the open market, The Times said on Monday.

Advertising group WPP was ahead by 5%, despite fears the company will downgrade its forecasts in interim results due later this week. Shares were 27.2p higher at 523.5p.

Shares in G4S shed 3%, down 7.42p at 216.2p, topping the FTSE 100 fallers' list, after first-half results from the security services group fail to inspire. Panmure Gordon repeated its 'sell' rating on the stock.

G4S's first half results are ahead of expectations in terms of revenue but slightly below on pretax profits after higher than expected interest costs, according to Panmure Gordon.

The broker maintains its 159p price target for G4S.

Life Insurers were on traders' wanted lists today as well. Legal & General, 2.28p ahead at 77.5p, Prudential up 2.5p at 536p Aviva 4.1p stronger at 414.8p, all registered gains.

Outside the top flight, shares in IT firm Anite rallied 10%, or 5.25p, to 39p after the stock is tipped for its 'bounce potential' in David Schwartz's Trader's Diary column in the FT on Saturday.

Schwartz says the next statement from the company is not due for several weeks but the 'shares are likely to rally if management is optimistic about the year ahead'.

Packaging firm Bunzl was another stock on the front foot - up 24.5p to 576.5p - after it reported a 4% rise in half-year profits and said margins improved in most of its major markets.

Another riser was engineering and construction firm Balfour Beatty, which added 12.15p to 352.7p after announcing it had been selected for a 415 million US dollar (£251m) road project in Texas.

Tuesday's agenda:

Hopes for further encouraging news on the property sector are pinned on half-year results from housebuilder Persimmon. The Charles Church builder has seen a recent improvement in sales rates, but is still expected to report a loss for the first six months of the year.

Motor insurance group Admiral reports back on half-year trading with expectations high after it delivered a record profits haul for 2008. The group's UK business, which includes the brands Diamond, Bell and elephant.co.uk as well as comparison website Confused.com, gave cheer to both staff and investors after the bumper year with a £4.5m shares bonus to employees and a 20% dividend hike.

Further news on the health of the beleaguered UK book industry is expected from publisher Bloomsbury as it reveals its interim results. The group, which published JK Rowling's Harry Potter stories, has so far managed to weather the downturn although life after the schoolboy wizard has seen profits fall.