FTSE 100 week: Dubai crisis fears ease

By Philip Scott
Updated: 19:01 EDT, 4 December 2009

Stocks appeared to settle this week after the heightened volatility seen amid the revelations of Dubai's debt crisis.

Footsie action: We round up the week's trading

On Tuesday, world markets jumped as they shrugged off fears over debt-ridden Dubai, clawing back some of the hefty losses seen after the country's woes first emerged.

But an added boost was provided on Friday, after the US Labor Department reported just 11,000 jobs were cut from non-farm payrolls in November, against economists' expectations of a cut of 130,000 jobs.

It brings the unemployment rate in the US to 10%, from 10.2% last month - prompting a late afternoon rally.

Over the week the FTSE 100 index of the UK's largest firms finished 1% or 76.63 points ahead at 5,322.36, taking the market almost 52% ahead from its March low.

David Buik, at BGC Partners, said: 'Markets hate uncertainty and this has been heightened. Investors were looking for an excuse to sell, which (the Dubai debt problems) have given them an excuse to do.'

'The concerns about Dubai was a wobble, but we now seem quiet happy that the problems are contained and manageable, so its onwards and upwards as investor risk appetite returns thanks to a weaker dollar,' said David Morrison, market strategist at GFT Global.

Banks stalled progress over the week. Royal Bank of Scotland, finished relatively flat, easing 0.27%, to 34.63p, as it emerged that it is expected to pay its investment bankers substantially less than rival institutions.

As shareholders contemplate whether or not to take up the 43% government-owned bank's record £13.5bn rights issue at 37p a share, Lloyds Banking Group loosened by 4% to 56p, making it the steepest faller on the FTSE 100 over the week.

Elsewhere Standard Chartered was flat, down just 0.46% at 1,513p but Barclays added 2% to 303.5p, while HSBC also gained 2% to 723.6p. But the London Stock Exchange continued to be hit by fears over its exposure to Dubai, with shares loosening 3% to 752.5p.

Life insurer Legal & General was also among the Footsie's fallers down 3% to 78.4p while Standard Life remained flat at 213.1p and Prudential added 1% to 642.5p.

A number of stocks slipped back as they turned ex-dividend, meaning that new investors are not entitled to the next shareholder payout. This hit National Grid, down 2% at 648p, and utility giant Severn Trent, 1% looser at 1,033p.

Airline shares enjoyed weekly gains. Low-cost carrier easyJet revealed a sharp rise in bookings, as passenger numbers rose by 12% to 3.35m in November, pushing its shares up 5% to 390p. A broker upgrade from 'hold' to 'buy' from Citigroup pushed British Airways to the top of the index, with shares 9% ahead over the week to 212p.

Mining shares were also in favour amid a fresh surge for gold to a new record price of around $1,217 an ounce, as the greenback continued to be snubbed by investors. Eurasian Natural Resources shot towards the top of the Footsie, with a 9% rise to 921p, while platinum miner Lonmin added 1%, to 1,809p. Rio Tinto also put on 1% to 3,125p and Kazakhmys gained 3% to 1,273p.

Vedanta Resources, another of the week's bigger risers added 4% to 2,399p as Goldman Sachs raised its rating to 'buy' from 'neutral' in a review of the European metals and mining sector. But the broker downgraded its stance on Anglo American – 1% higher to 2,607p - to 'neutral'.

B&Q owner Kingfisher fell 1% to 238.8p despite revealing that like-for-like sales were up 5.7% in the 13 weeks to 31 October while rival and Homebase owner, Home Retail Group, jumped 4% to 310.8p. Still celebrating its victory in enticing Marc Bolland away from Morrisons, Marks & Spencer Group, hoping for bumper Christmas sales enjoyed a 5% hike to 402.2p over the week. Morrisons finished 1% better 279.7p while Tesco, added 1% to 433.4p and Next jumped 4% to 2,059p.

Outside the top flight, the FTSE 250 listed property website Rightmove endured the steepest fall over the week in the index, tumbling 9% to 498p, following rumours that Google was considering the launch of its own online property portal. But brewer Marston's was among the peer groups top risers, after firming 10% to 93p, as the company offset any disappointment over lower full-year profits by reporting an improved sales trend at its managed pubs in recent weeks.

Greene King was another strong riser after posting a 3% rise in half-year profits. It also told investors that it was confident of further progress in the second half, causing shares to rise 6% to 430p. Rival Mitchells & Butlers, added 5% to 264.7p, as it defied its biggest shareholder by announcing the appointment of senior director Simon Laffin as chairman.

Housebuilders were in positive territory after the Nationwide said house prices rose for the seventh month in a row during November. Charles Church owner Persimmon lifted 8% to 462.2p, while Bovis Homes cheered 1% to 404.5p and Bellway added 2% to 758p. Berkeley Group despite reporting a steep fall in profits still managed to add 4% to 876p.

THE WEEK AHEAD

Tesco updates the market on Tuesday, while trading statements arrive from both Standard Chartered and Carillion on Wednesday. Sports Direct posts its interims on Thursday while entertainment giant HMV delivers its update on Friday.