FTSE close: Home, HMV, Morrisons down; Lloyds up

By This Is Money
Updated: 12:10 EDT, 9 September 2010

17.00 (close)

Stock markets made strong gains on both sides of the Atlantic today as positive US economic data helped ease recovery fears.

The FTSE 100 Index climbed 64.4 points to 5494.2, overcoming wobbles earlier this week on nerves over Europe's sovereign debt crisis and the shock of two high-profile leadership changes at blue chip banks.

America's Dow Jones Industrial Average was up in early trade as investor sentiment received a boost from news of a drop in US unemployment claims to 451,000.

The Commerce department also revealed a sharp contraction in the country's trade deficit in July.

Figures on the UK trade deficit were dire by contrast, hitting the worst level on record, but this failed to hold back progress on the Footsie.

The trade disappointment saw sterling edge lower against most major currencies, down 0.1% to 1.54 dollars.

A predicted hold on interest rates by the Bank of England added to the pressure on the pound.

Policymakers kept rates at 0.5% for the 18th month in a row and also continued with the Bank's £200bn quantitative easing (QE) programme.

Among stocks, Barclays and HSBC were both in positive territory as investors came to terms with the changes at the top announced earlier this week.

Barclays lifted 15.4p to 323.4p as concerns faded over the appointment of multi-millionaire banker Bob Diamond as chief executive.

HSBC also turned in a better performance after Tuesday's announcement that chairman Stephen Green is leaving the bank to become a trade minister, with shares lifting 6.8p to 661.6p.

Progress in the Footsie came despite a poor performance from retail stocks after major players including Argos owner Home Retail Group, music retailer HMV and supermarket Morrisons highlighted softer consumer confidence.

Home Retail led the fallers board in London as it warned full-year profits were likely to be towards the bottom end of market expectations.

While it said Argos and DIY chain Homebase performed well in testing conditions, like-for-like sales for both divisions were still lower in the six months to August 28. Shares slipped 3% or 6.2p to 215.2p.

Morrisons was also under pressure as the supermarket warned it expected the recent low growth in like-for-like sales rates to continue. Underlying profits lifted 14% at the half-year stage but shares failed to respond, unchanged at 292.5p,

Outside the top flight, HMV shares fell more than 10% or 7.3p to 59.3p after it said first quarter like-for-like sales in the UK and Ireland dropped 14.9%. It blamed a weak gaming market and the impact of the World Cup on the pipeline of new releases.

Commodity stocks bounced back after yesterday's fall in commodity prices, including the benchmark price of crude oil. Among them, Vedanta Resources lifted 66p to 2038p.

The biggest Footsie risers were Royal Bank of Scotland up 2.3p to 48.2p, Barclays ahead 15.4p to 323.4p, Arm Holdings up 15.5p to 403.2p and Carnival up 82p to 2359p.

The biggest Footsie share fallers were Home Retail Group down 6.2p to 215.2p, BAE Systems off 4.2p to 319.1p, Cairn Energy off 5.1p to 444.9p and BT Group down 1.6p to 140p.

15.00

US stocks opened on the up after positive jobs and trade data lifted optimism over the country's fluctuating recovery.

Wall Street's Dow Jones Industrial Average rose 0.8% and the Nasdaq Composite lifted 1% after the US Labor department reported a drop in unemployment claims to 451,000, and the Commerce department revealed a sharp contraction in the country's trade deficit in July.

The boost in traders' confidence rippled over the Atlantic, where the FTSE 100 index was up 69 points at 5,498.

13.30

Barclays, HSBC and Royal Bank are in positive territory as nerves over Europe's sovereign debt crisis and the shock of two high-profile leadership changes began to fade.

With the Bank of England meeting City expectations by keeping interest rates at a record low, the FTSE 100 Index stands 42 points higher at 5,472.

Barclays saw its shares rise 2% or 5.9p to 313.9p as concerns faded over the appointment of multi-millionaire banker Bob Diamond as chief executive.

HSBC turned in a better performance after Tuesday's announcement that chairman Stephen Green is leaving the bank to become a trade minister, with shares lifting 3.5p to 658.3p. Royal Bank of Scotland was up 1.2p at 47p.

Commodity stocks bounced back after yesterday's fall in commodity prices, including the benchmark price of crude oil. Among them, Vedanta Resources lifted 56p to 2028p and BHP Billiton was ahead 41.8p to 1931p.

10.30

Retail stocks led the London market lower today after the owner of Argos said life on the high street was tough.

The FTSE 100 index slipped 9 points to 5420.7, despite a better showing on Wall Street and Asia overnight as recent worries over the European sovereign debt crisis began to fade.

Home Retail led the fallers' board in London after it warned full-year profits were likely to be towards the bottom end of market expectations.

While it said Argos and DIY chain Homebase performed well in testing conditions, like-for-like sales for both divisions fell in the six months to August 28. Shares slipped 3% or 6.2p to 215.2p.

Music and games retailer HMV also disappointed the City with its trading update: its shares fell 9% or 6.25p to 60.2p after it said first quarter like-for-like sales in the UK and Ireland dropped 14.9%.

It blamed a weak gaming market and the impact of the World Cup on the pipeline of new releases.

'This is a shoe that has been waiting to drop for some time,' said Jeremy Batstone-Carr, strategist at Charles Stanley, said.

'Given the extent to which consumers are retiring debt rather than living on credit and bunkering down ahead of what Nick Clegg (UK Deputy Prime Minster) described as "choppy and uncertain times ahead" this is all going to have an adverse affect on discretionary spending.'

Morrisons was also under pressure as the supermarket warned it expected the recent low growth in like-for-like sales rates to continue. Underlying profits lifted 14% at the half-year stage but shares slipped 5.5p to 287p.

Lloyds Banking Group was among the top risers - 1.88p up at 74.2p - after agreeing to sell its stake in housebuilder Crest Nicholson to US investment company Varde, continuing to shed non-core assets and refocus on its core lending activities.

The UK bank was also helped by Barclays Capital which raised its rating to 'equalweight' from 'underweight'.

ARM Holdings, which has been mentioned as a potential bid target, put on another 14.5p to 402.2p after winning a first contract for its new cortex-a15 mpcore processor, from Texas Instruments.