FTSE Close: Tesco, TUI Travel up; Inmarsat down

By Adrian Lowery
Updated: 12:21 EDT, 5 October 2010

17.10 (close)

London's blue chip share index steamed 1.4% ahead today thanks to a boost from cheery news on the world's biggest economy.

Better-than-expected service sector survey data in the US sent stocks surging worldwide, adding to investor optimism after moves by the central bank of Japan to weaken the yen.

The FTSE 100 Index closed 79.8 points higher at 5635.8 - after a late session spurt sparked by hefty gains on America's Dow Jones Industrial Average.

A trade group report revealed that the powerhouse US services sector saw growth pick-up in September thanks to stronger demand, helping allay recovery fears.

Stocks globally had already been put on the front foot after Japan's decision to cut its key interest rate even closer to zero and re-launch money boosting efforts.

The UK also had some good news on the service sector after the latest Markit/CIPS study showed higher growth against expectations for a fall.

Better economic news helped the pound rise 0.7% to $1.59, although it eased back against the euro after gains yesterday.

In corporate news, there were encouraging figures from supermarket Tesco and Thomson Holidays owner TUI Travel.

Tesco edged up 0.9p to 431.3p after it reported a slight improvement in UK like-for-like sales and said it was benefiting from the "tailwinds of recovery". Half-year pre-tax profits lifted 12% to £1.6bn.

Most analysts said the update allayed fears about difficult trading conditions, although Evolution Securities said the underlying trends were "not quite so rosy".

Sainsbury's, which is due to issue a trading statement on Wednesday, gave back early session gains to stand 0.3p higher at 389.6p.

Thomson parent TUI was one of the session's top risers after the group said its summer programmes, which run to the end of October, were now almost fully sold following strong booking activity in recent weeks.

TUI shares gained 9.1p to 225.9p - a rise of 4%.

British Airways was flying high after it posted an increase in passenger traffic for the first time since February.

It said 4.3% more passengers travelled with the airline last month. Shares lifted 15.5p to 254.6p.

Satellite communications firm Inmarsat posted the biggest fall in the Footsie after its largest shareholder sold half its 28% stake in the firm.

The move by private equity firm Harbinger appeared to dash hopes that it will table an outright bid for Inmarsat, which dropped 4% or 26p to 629p.

In the FTSE 250, home insurance group Homeserve improved 4%, or 17.1p to 459.1p, after a positive note from broker Credit Suisse.

It said recent transactions had strongly increased Homeserve's growth potential and earnings visibility.

FTSE 250 haulage firm Stobart Group was also on the right track thanks to news of a three-year "multi-million pound" distribution deal with soft drinks giant Britvic. Stobart shares added 2.9p to 150.3p.

The biggest Footsie risers were British Airways ahead 15.5p to 254.6p, Man Group up 9.5p to 227.1p, TUI Travel up 9.1p to 225.9p and Anglo American ahead 103.5p to 2641.5p.

The biggest Footsie fallers were Inmarsat off 26p to 629p, Burberry down 12p to 1014p, Kingfisher off 2.4p to 230.5p and Cairn Energy down 4.3p to 445p.

16.00

A bounce-back on Wall Street gave the London market a late session fillip today as stocks resumed their autumn rally.

The FTSE 100 Index raced 1.5% higher - up 71.4 points at 5,627.4 - after the Dow Jones Industrial Average in America leapt more than 90 points on opening.

US stocks were reacting to stronger than expected data on the service sector and moves by the central bank of Japan to weaken the yen - cutting its key interest rate even closer to zero and relaunching money boosting efforts.

The prospect of a stronger Japanese economy and for other countries to follow suit with plans to support the global recovery cheered investors. It marked a turnaround after London's Footsie closed lower last night, as did the Dow.

13.00

Data suggesting a surprise pick-up in service sector growth last month helped London's top tier rise more than 30 points at one stage. But the Footsie later lost its gains, slipping to 5,564, eight points ahead on the day.

Expectations for a better session on Wall Street helped limit the FTSE 100 pull-back.

Tesco also lost its shine, down 0.9p to 429.5p following an initial 1% gain.

Thomson parent TUI held firm in positive territory, gaining 10.1p to 226.9p - a rise of 5%.

Insurers were among those in the red, led by Admiral and Prudential with losses of 20p to 1651p and 7.5p to 628p respectively.

In the FTSE 250, home insurance group Homeserve improved 4%, or 16.5p to 458.5p, after a positive note from broker Credit Suisse. It said recent transactions had strongly increased Homeserve's growth potential and earnings visibility.

FTSE 250 haulage firm Stobart Group was also on the right track thanks to news of a three-year 'multi-million pound' distribution deal with soft drinks giant Britvic. Stobart shares added 3.8p to 151.2p.

09.30

Positive figures from Tesco and TUI Travel today boosted their shares and gave some support to the wider market.

The pair topped the blue-chip risers' board and helped the FTSE 100 Index rise 11 points to 5,566.5.

'It is a bit like pulling teeth at the moment, with not much too go on. Everyone is hoping that something might get sparked by upcoming data and corporate results season, but no one wants to push too hard until then,' said Phil Gillett, a trader at Spreadex.

TUI Travel was the strongest riser in the FTSE 100, up 3% or 7.5p to 224.3p, after it said its summer programmes, which run to the end of October, were now almost fully sold following strong booking activity in recent weeks. Thomas Cook, which issued a trading update two weeks ago, also gained with a rise of 3p to 176p.

Meanwhile, Tesco shares were 1% higher after it reported a slight improvement in UK like-for-like sales and said it was benefiting from the 'tailwinds of recovery'. Half-year pre-tax profits lifted 12% to £1.6bn.

Analysts said the update allayed fears about difficult trading conditions, prompting Tesco shares to lift 4.8p to 435.2p. Sainsbury's, which is due to issue a trading statement on Wednesday, lifted 2.1p to 391.4p.

BP shares ticked up 1.5p to 431.6p after chief executive Bob Dudley said it may sell its main Vietnam assets in an exclusive deal to its Russian joint venture TNK-BP for around $1bn.

Invensys was also a good blue chip gainer, adding 2.1p to 300.1p after Citigroup upped its rating to 'buy'.

Kazakhmys is worst of weak mining stocks, down 16p to 1,407p, after the company said chairman Vladimir Kim had sold around an 11% stake in the company to the Kazakh National Welfare Fund, reducing his holding to 27.9%.

In reaction, Evolution Securities cut its rating for Kazakhmys to 'reduce' from 'add'.

Satellite communications firm Inmarsat posted the biggest fall in the FTSE 100 Index after its largest shareholder sold half its 28% stake in the firm. The move by private equity firm Harbinger appeared to dash hopes that it will table an outright bid for Inmarsat, which dropped 3% or 22p to 633p.

In a surprise move on Tuesday, the Bank of Japan cut interest rates and pledged to keep rates at zero until prices are seen stable.

Australia's central bank left interest rates on hold, confounding expectations for a rise, though the central bank did emphasise that higher rates would likely be needed in time to contain inflation.