FTSE in-depth: End of US slump lifts the spirits
Thank goodness for that. Investor confidence was given a huge boost by keenly awaited US data showing that the world's largest economy grew in the third-quarter, unofficially ending the worst recession in 70 years.
Geoff Foster:
Goldman Sachs on Wednesday spooked everyone by downgrading its quarterly GDP growth forecast to 2.7% from 3%, but the giant broker's assessment was found to be embarrassingly inaccurate.
The figure came in at 3.5%, the fastest growth rate in two years, confounding the pessimists and allaying fears of a double-dip recession.
The Footsie retrieved a 39 point deficit to trade 65 points higher on the data before closing 57.30 points better at 5,137.72. Wall Street celebrated with an early leap of 112 points.
Sentiment across the Pond was also helped by news that the number of people collecting regular state benefits fell by 148,000 in the week ended October 17, to a seasonally adjusted 5.8m, the fewest since March.
Green lights flashed for the part-nationalised banks after Lloyds Banking Group confirmed that the government may be ready to give the go-ahead for its mammoth £25bn re-financing plan.
It will include one of the world's largest ever rights issues and a debt swap, to help it avoid harsh European Union anti-trust sanctions. Buyers chased the shares up 6% to 86.51p on hefty turnover of 176m.
Royal Bank of Scotland, which is 73% owned by the UK taxpayer, rallied 3.77p to 43.375p.
Barclays rose 11p to 330p after Oriel Securities advised clients to buy on weakness. Analyst Mike Trippitt said: 'There's no logical reason why the stock should be down 13% over one month in sympathy with the rest of the sector.'
Evolution, the investment banking and private client management group, advanced 7.4p to 159.4p on a positive trading update. It is experiencing strong trading across all its businesses and 2009 full year profit is expected to exceed current market forecasts.
Arden Partners expects the shares to reach £2 this year. It says Evolution is the only investment bank which has hired significantly at the bottom of the bear market. The group's revenue potential is now starting to come through.
Better-than-expected third-quarter results helped chip maker CSR jump 30.3p to 432.7p. The company said it was confident of growing market share in mobile phones, netbooks and automotive. Customers remained cautious, but its products combining bluetooth, wi-fi and global positioning systems.
Environmental consultancy RSP Group gained 12.2p at 212.7p after saying it expected results for the full-year to be in line with expectations. KBC Peel Hunt has a target price of 250p and believes this will reassure investors. Better energy market dynamics, international diversification and the focus on operations will help re-rating and earnings recovery in 2010.
Confirmation of a 1-for-2 rights issue at 100p to raise £83.5m left Laird 14p lower at 166.3p. Management said the fund-raising will 'provide appropriate headroom against the covenants' and allow 'continued investment in the business for future growth'.
After announcing its biggest contract to date, Hightex rose 1½p to 8.4p. The designer and installer of roofs for sports arenas worldwide, is supplying the roof and cable system for the Olympic Stadium in Kiev in time for the European football championships in 2012.
The total value of the contract is €18.9m, a substantial part of which will be earned during the year ending December 2010. Hightex help construct the retractable roof over the famous Centre Court at Wimbledon.
Support services group Scott Wilson responded to a positive trading update with a gain of 11p at 129p.
Coal of Africa edged up ½p to 101p following news of a placing of 59.8m shares at 95p to raise £59.6m. Cash raised will help finance the acquisition of NuCoal Mining, a thermal coal producer with assets in South Africa and in close proximity to Coal's Mooiplaats mine.
Metals Exploration firmed 1¾p to 22¾p after being granted a Financial or Technical Assistance Agreement (FTAA) to develop its Runruno gold-molybdenum project. The FTAA ensures security of legal title for 25 years with an option to renew for a further 25 years.
European technology-based distributor Acal advanced 12p to 127½p following its planned acquisition of BFI OPTILAS, a private specialised distributor of electronic and photonic components. The consideration is €10m payable in cash and 2m Acal shares.
• Norseman Gold sparkled at 50¼p, up 1¼p, after announcing approval to commence production at its third mine, OK Decline, in Western Australia.
It expects its first ore from the mine will be produced in March 2010, increasing the company's total full year forecast up to a better-than-expected 80,000-85,000 ounces of gold. Development on the fourth and fifth mines on the project is progressing well.
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