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FTSE close: BHP profits; BoE inflation view

By Ed Monk for Thisismoney.co.uk
Updated: 12:13 EDT, 16 February 2011

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17.10 (close)

Dealers monitor their screens on the trading floor of IG Index in London

Waiting game: Economy data set the agenda today

Banking stocks pushed the FTSE 100 Index higher today after French bank Societe Generale lifted the mood with a stellar fourth-quarter profit haul.

The top tier shrugged off the Bank of England's gloomier assessment of the UK economy for the rest of the year and edged closer to a new 29 month high.

The Footsie closed 48.2 points higher at 6085.3, despite the Bank downgrading the UK's growth forecast and warning in its quarterly inflation report that CPI could rise towards 5% in the coming months.

The strongest US housebuilding figures for 20 months also lifted confidence in the global recovery and led to gains on the New York Stock Exchange.

The pound fell against both the dollar and the euro after Bank Governor Mervyn King downplayed the likelihood of an imminent interest rate hike.

Sterling stood at 1.60 against the greenback and at 1.18 against the euro.

Heavily weighted banking stocks made further gains after Barclays reported a 32% rise in profits to £6.1bn yesterday, with HSBC and Royal Bank of Scotland both rising by around 3%.

Confidence in the sector was lifted by results from Societe Generale, which posted net profit in the fourth quarter of 874m euros (£735m) - four times its earnings in the previous year. The results have been viewed by analysts as a sign the wider industry is on the mend.

In London, Royal Bank of Scotland was up 1.95p at 47.2p, HSBC added 19.9p at 721.5p and Barclays was ahead 3.3p at 332p.

Elsewhere, several property firms featured on the risers boards after HSBC and Goldman Sachs upgraded stocks in the sector. Land Securities and British Land were up 25p to 727p and 14.5p to 557.5p respectively.

Anglo-Australian miner BHP Billiton was one of the biggest Footsie fallers despite reporting a 71% jump in half-year profits to 10.5bn US dollars (6.5bn) and pledging to return 10bn US dollars (£6.2bn) to shareholders this year.

The company said it was "cautiously optimistic" about the short-term outlook for the global economy, but shares slipped 36p to 2464p.

In the UK retail sector, Thorntons shares fell 9p to 92p after it revealed a drop in half-year profits and said trading so far in 2011 has been weak. The chocolatier revealed that December's snow had increased costs in its supply chain by £500,000 and said some of its stores may close when their leases come up for renewal.

And Game Group shares were 1.8p lower at 70.3p as investors gave a lukewarm response to a new strategy to boost its online sales and increase the amount of deals it offers to its 15 million loyalty card members.

The biggest Footsie risers were Resolution up 16.6p at 280.6p, GKN ahead 9.3p at 217p, Royal Bank of Scotland up 1.95p at 47.2p and Land Securities ahead 25p at 727p.

The biggest Footsie fallers were Serco down 8p at 543p, BHP Billiton off 36p at 2464p, Tullow Oil down 18p at 1409p and BG Group off 18p at 1496.5p.

15.30: US markets are trading higher after strong results from Dell and a deal for French drugs firm Sanofi-Aventis to buy Genzyme boosted sentiment across the Atlantic.

The Dow Jones is 63.1 points higher at 12.289.8.

Back in London, the FTSE 100 is up 45.8 points at 6,082.8 as the end of the session approaches.

We have more on Game Group's overhaul of its customer and online strategy. Investors have given the announcment a lukewarm reception, sending the shares down 0.75p to 71.25p.

13.15:

The pound has slumped against the dollar and the euro after Bank of England governor Mervyn King rowed back from suggestions that rates may be about to rise.

Sterling stood at $1.61 the greenback and at €1.19 against the single currency.

In equities, the FTSE 100 is 40.9 points higher at 6078.01.

The risers board in London has featured several property stocks after HSBC and Goldman Sachs upgraded stocks from the sector, including Land Securities and British Land, up 23.8p to 725.8p and 12.3p to 555.3p respectively.

Heavily weighted banking stocks have also made gains after Barclays reported a 32% rise in profits to £6.1bn yesterday, as HSBC and Royal Bank of Scotland both rose 2%.

Anglo-Australian miner BHP Billiton was the biggest Footsie faller despite reporting a 71% jump in half-year profits to $10.5bn and pledging to return $10bn to shareholders this year.

The company said it was 'cautiously optimistic' about the short-term outlook for the global economy but shares slipped 57p lower to 2443p. We've got more on BHP here.

Beer giant Heineken refreshed markets after it delivered better-than-expected results amid 'challenging but improving' economic conditions.

The company reported strong profits growth in the UK despite a declining beer market as it benefited from price increases and cost savings, including the closure of breweries in Reading and Dunston near Newcastle. Here's more on that.

11.50:

Here's more on the always-watched Bank of England Quarterly Inflation Report.

Inflation is as likely as not to remain stubbornly above target until 2014, the Bank of England admitted.

While it reiterated its central forecast that inflation will fall back to 2% in two years' time, the Bank bases this on 'market expectations of rate rises' - the implication of which is that rates will go up this spring, with May as the best bet.

Here's the full story.

Meanwhile, the FTSE 100 is 31.32 points better off at 6068.40.

10.45:

It is a busy morning for economy news.

Unemployment data was worse than expected with fewer people in jobs, more claiming the dole, many forced into part-time work and a record number of 16 to 24-year-olds out of work. Wage rises also slowed - although this may ease inflation pressure.

The full story with reaction is here.

Perhaps of more interest for the markets, the Bank of England publishes it's latest thinking on inflation - seen as key to the future direction of interest rates.

The Quarterly Inflation Report confirmed that the Bank expects inflation to remain well above target all this year, and the rate-setters are split on what will happen after that. Full report soon.

However, equities seem unworried by all this and the FTSE 100 is now 37.55 points higher at 6074.63.

09.30:

The FTSE 100 gained today after a profits boost at BHP Billiton, while investors looked for clues on a future rate rise in the Bank of England's inflation report.

Markets across Europe were on the rise after beer giant Heineken delivered better-than-expected results amid 'challenging but improving' economic conditions.

The confidence boost from Heineken, which followed a decent session for Asian markets, helped the FTSE 100 Index climb 33.1 points to 6070.5, a rise of 0.5%.

The risers board in London featured a number of property stocks after HSBC and Goldman Sachs upgraded a number of stocks in the sector, including Land Securities and British Land, up 15.5p to 717.5p and 10p to 553p respectively.

Anglo-Australian miner BHP Billiton provided the other major focus after its 71% jump in half-year profits to $10.5bn and pledge to return $10bn to shareholders this year.

The company was also 'cautiously optimistic' about the short-term outlook for the global economy but shares still edged 18.75p lower to 2481.75p.

In the UK retail sector, Thorntons shares fell 9.75p to 89.25p after it revealed a drop in half-year profits and said trading so far in 2011 has been weak. And Game Group shares were 1p lower at 71p as it outlined plans to increase sales over the internet as part of a turnaround strategy.

In economy news, the Bank of England publishes its latest forecast for inflation later this morning, a key indicator of thinking on interest rates.

Additionally, unemployment data is out. The overall rate of unemployment is expected to rise, although fewer jobless people are expected to have signed on for Jobseeker's Allowance.

Check back for more on these economy stories, plus the key corporate results news of the day.

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