LONDON (ShareCast) - London's reaction to the keenly awaited Italian bond auction bordered on indifference, but investors took heart from US business activity data. Propelled by Wall Street's tail-winds, Footsie finished on a high for the day.

Italy sold €2.5bn worth of benchmark 10-year bonds at an interest rate of 6.98%, below the psychologically important 7% level, but hardly a level to prompt dancing in the streets.

At a similar auction last month the interest rate was 7.56% indicating the perception of risk has lessened, although it remains extremely high.

Italy also sold €2.5bn in three-year bonds at an interest rate of 5.62% compared to the 7.89% level seen in November.

A final €2bn tranche of bonds due in 2018 and 2021 was also sold at floating rates.

Business activity in the US has performed better than expected, with the Institute of Supply Management in Chicago revealing its business barometer index dropped 0.1 from 62.6 in November to 62.5 in December. Forecasters had been expecting a bigger drop. Any reading above 50 implies growth.

A DAY FOR THE TIDDLERS TO ENJOY THE LIMELIGHT

Trendy clothing firm Supergroup clawed back some of yesterday's losses, though in contrast to the market as a whole it finished well below its intra-day high. The stock was hammered yesterday by rumours that Christmas trading had been less than stellar.

Infrastructure investor International PPL is aiming to pay a dividend of 6p per share during 2012 but gave a heads-up to shareholders that a share issue could be on the cards in 2012 to fund some juicy acquisitions.

Speculators are hopping off the AIM-listed tiddler Optare bandwagon, after Alexander Dennis Limited said it was no longer interested in making an offer for the bus and coach builder. Ashok Leyland, which has a 26% stake in Optare, informed Alexander Dennis it is not interested in selling its stake "at any price".

Univision Engineering, the security company focused on China and Taiwan, shot up on Thursday morning after reporting increased revenues in the half year to the end of September.

UNDERMINED

Shaft Sinkers headed lower after the underground construction group said that, due to the continued slow progress resulting from extremely difficult ground conditions previously announced, it has entered into discussions with its client EuroChem with a view to amend or terminate the contract. Sinking works have now been suspended and the parties are in negotiation on the way forward.

Shares in the Kazakhstan gold miner, Hambledon Mining, lost their lustre on news the company faces a £1.17m fine. The Kazakh authorities have taken exception to an “administrative offence arising from environmental damage”.

It was a bad day, in any case, for precious metals miners, with the prices of gold and silver heading south. Gold miner Randgold and silver miner Fresnillo were among the few blue-chips to fall back on the day.

The most actively traded gold futures contract was down $27.90 at $1,536.20 per ounce in New York trading, while its silver counterpart was 37 cents softer at $26.86.

Gilt yields eased in the wake of the Italian bond auction. The benchmark 10-year gilt saw its yield ease half a percentage point to 1.96%.

FTSE 100 - Risers
Smith & Nephew (SN.) 619.00p +2.57%
Amec (AMEC) 903.50p +1.92%
Petrofac Ltd. (PFC) 1,442.00p +1.91%
BT Group (BT.A) 191.50p +1.86%
Resolution Ltd. (RSL) 251.10p +1.82%
Weir Group (WEIR) 2,013.00p +1.77%
ITV (ITV) 66.65p +1.76%
CRH (CRH) 1,246.00p +1.71%
Royal Dutch Shell 'A' (RDSA) 2,371.50p +1.69%
British Sky Broadcasting Group (BSY) 734.50p +1.66%

FTSE 100 - Fallers
Polymetal International (POLY) 1,089.00p -1.80%
Essar Energy (ESSR) 168.80p -1.29%
Vedanta Resources (VED) 1,002.00p -0.89%
Fresnillo (FRES) 1,496.00p -0.66%
Burberry Group (BRBY) 1,183.00p -0.42%
Randgold Resources Ltd. (RRS) 6,525.00p -0.23%
Eurasian Natural Resources Corp. (ENRC) 624.00p -0.08%
British American Tobacco (BATS) 3,057.00p -0.02%
Marks & Spencer Group (MKS) 308.60p 0.00%
SABMiller (SAB) 2,261.00p 0.00%

FTSE 250 - Risers
Kesa Electricals (KESA) 66.65p +3.65%
Renishaw (RSW) 976.50p +3.55%
Ophir Energy (OPHR) 282.00p +3.15%
Cable & Wireless Worldwide (CW.) 15.70p +2.95%
SVG Capital (SVI) 206.70p +2.84%
Go-Ahead Group (GOG) 1,412.00p +2.77%
Hikma Pharmaceuticals (HIK) 624.50p +2.55%

FTSE 250 - Fallers
Carpetright (CPR) 479.50p -4.48%
Redrow (RDW) 111.50p -3.88%
Petropavlovsk (POG) 595.50p -3.64%
Betfair Group (BET) 761.00p -2.62%
Cape (CIU) 327.50p -2.15%
Shanks Group (SKS) 91.40p -2.14%

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