FTSE close: Next, M&S up; Imperial Tobacco down

By This Is Money
Updated: 13:30 EDT, 24 March 2011

17.15 (close)

Bold: Investors seemed unfazed by Portuguese Prime Minister Jose Socrates' resignation

Strong results from retailers Next and B&Q-owner Kingfisher pushed the London market higher today and helped offset concerns over Portugal's debt crisis and the ongoing conflict in Libya.

The FTSE 100 Index also shrugged off worse than expected UK retail figures that revealed sales fell 0.8% between January and February as shoppers were deterred by record price hikes.

The Footsie closed up 85 points at 5880.9 after being boosted by strong performances from retailers and mining stocks.

The pound was down against the euro after today's lower than expected retail figures was seen lowering the chance of an imminent hike in interest rates.

Sterling fell to 1.14 euros and eased back to 1.61 US dollars.

Next was up 4% or 78p to 2043p after it posted a 9% increase in pre-tax profits to £551 million. And Kingfisher rose 17.6p to 261.4p after it saw profits grow 23% to £670m and hiked its full-year dividend to shareholders by 28% to 7.07p. Both groups enjoyed profit upgrades from analysts.

Other retailers were also up as the figures boosted sentiment on the sector. Marks & Spencer surged 12.6p to 358.1p and Primark owner Associated British Foods was ahead 22.5p at £1.

Investors seemed unperturbed by the escalating debt crisis in Portugal. The country is looking increasingly likely to require an EU bailout after its Government failed to secure backing for its austerity package and the country's credit rating was downgraded by Fitch.

Mining stocks offered support as metal prices, including aluminium and copper, were at three-week highs.

Anglo American was up 67.5p at 3184.5p, silver miner Fresnillo was ahead 41p at 1533p and platinum firm Lonmin added 31p at 1670p.

Oil prices continued to rise as air strikes in Libya intensified and reports that Middle Eastern pipelines had been shut down emerged, sending Brent crude up to 115 US dollars per barrel.

Elsewhere, Resolution - the owner of life and pensions firm Friends Provident - advanced 2% after reporting record sales at its Lombard wealth management business.

Resolution said the strong performance at Lombard, and its international arm, helped offset a weaker show at Friends Provident. Shares were up 5.1p at 289.3p.

BT also made slight gains, despite a profit warning from rival Cable & Wireless Worldwide. BT shares were 1.1p higher at 181.5p, although Cable & Wireless dropped 0.8p to 48.5p on the FTSE 250 Index after it said earnings for its next financial year would likely remain flat.

Engineering firm Invensys headed the top flight's fallers board, down 16.1p to 341.2p, after shocking the City with news that chief executive Ulf Henriksson has stepped down.

Imperial Tobacco was also in the red, down 12p to 1910p, after it said first half cigarette volumes were expected to fall by around 1%.

The biggest Footsie risers were Kingfisher up 17.6p at 261.4p, Essar Energy ahead 21.7p at 489.8p, BG Group up 63p at 1538p and Next ahead 78p at 2043p.

The biggest Footsie fallers were Invensys down 16.1p at 341.2p, Smiths Group off 11p at 1314p, G4S down 1.7p at 251.6p and Imperial Tobacco off 12p at 1910p.

15.00: The Dow Jones is trading up 34.4 points at 12,120.5 shortly after the opening bell.

Investors have been heartened by the latest unemployment figures, which indicate that economic recovery is taking firmer hold across the Atlantic.

The US Labor Department revealed the number of benefit-seekers dropped by 5,000 to 382,000 in the week ended March 19. The average number of unemployment filings in the last four weeks subsequently dropped to 385,250, the lowest since July 2008.

Best Buy shares are up after it beat profit forecasts following strong smartphone sales.

The FTSE 100 is up 60.3 points at 5,856.2.

13.15:

The FTSE 100 has extended gains and is trading 61.3 points higher at 5,857.2.

Futures trading points to a positive open on the Dow Jones. US jobless claims came in lower than forecast, while the latest durable goods order data was disappointing.

Bargain electronics retailer Best Buy is due to report quarterly results later.

10.15:

The Footsie is out of the traps smoothly this morning, up 28 points to 5,823 after a retail boost from Next and B&Q owner Kingfisher.

This also followed gains for other blue-chip players including a rise of 11p to 356.45p for Marks & Spencer and a gain of 7.2p to 387.4p for Tesco.

Observers noted some returning appetite for risk to the market which has been dogged by concerns over the euro zone debt crisis, political turmoil in the Arab world, and the aftermath of the earthquake in Japan.

Investors seemed unfazed by news that Portuguese Prime Minister Jose Socrates resigned yesterday and warned of grave consequences for the country after parliament rejected his government's latest austerity measures aimed at avoiding a bailout.

His move was expected to increase the likelihood that Portugal will join Greece and Ireland in requiring aid from the European Union.

Ratings agency Moody's downgraded its debt ratings of 30 Spanish banks by one or more notches.

'We're seeing a bit of a return to the risk scenario,' Angus Campbell, head of sales at Capital Spreads, said. 'The European debt situation is not a pretty thing at all, but the market seems to have very much taken it in its stride... it seems to have been slightly brushed under the carpet.'

Next's pre-tax profits of £551m were up 9% on a year earlier, prompting a 5% rise in its share price - 90p to 2,055p - after the fashion chain's figures met City expectations.

Kingfisher remained cautious about trading conditions but said profits still rose 22.5% to £670m in the last year as it hiked its full-year dividend to shareholders by 28% to 7.07p. This helped propel Kingfisher's shares by 6% or 14.45p to 258.25p.

Imperial Tobacco was the biggest faller in the leading FTSE 100 index, down 52.5p to 1869.5p, after it said first half cigarette volumes were expected to fall by around 1%.

'It's hard to characterise this as anything other than a difficult statement from Imperial,' Investec says in a note. 'Ongoing difficulties in Spain and unfavourable tax changes in yesterday's UK budget won't be helpful to sentiment.'

Peer British American Tobacco is down 8p (0.3%) to 2,377p.

The mood in the telecoms sector was less positive after Deutsche Bank reduced its target price on Cable & Wireless Worldwide, even though the FTSE 250 firm said it continued to trade in line with expectations. Shares were down 9% or 5.85p to 57.4p, while BT Group dropped 2.95p to 177.45p.

Shares in RPC Group have jumped more than 13% to 275p, the top FTSE gainer, after the plastic-packaging supplier says it expects profit for the current financial year to beat its expectations. Panmure Gordon ups its price target to 476p from 336p and maintains a 'buy' rating on the stock, raises its 2011 forecast for pretax profit to £43m from £41m.

The FTSE Small Cap index is 0.1% lower in early deals.

Sopheon rises 0.6p (6.7%) to 10.4p after the financial software and services firm reported full-year revenues and earnings were ahead of market expectations, issuing an upbeat outlook.

Clinton Cards falls 1.7p (7.1%) to 22.1p after the retailer released first-half results and said group like-for-like sales performance could be a low single digit for the second-half.

Oil rose today, as concerns about instability in the Middle East outweighed worries about the economic health of the eurozone following the resignation of Portugal's prime minister.

May Brent rose 18 cents to $115.73 a barrel. US crude was up 68 cents to $105.43, supported by a steep decline in US gasoline stockpiles for the week to March 18.