Portfolio

London close: Stocks rise on hopes of Monte dei Paschi bailout, further ECB stimulus

By Renae Dyer

Date: Wednesday 07 Dec 2016

London close: Stocks rise on hopes of Monte dei Paschi bailout, further ECB stimulus

(ShareCast News) - London stocks were sitting higher on Wednesday as hope of a bailout of Italy's Banca Monte dei Paschi di Siena lifted investor sentiment.
The FTSE 100 closed up 1.81% to 6,902.23 points.

Shares in Banca Monte dei Paschi di Siena rose after La Stampa reported that Italy could ask for a €15bn European Stability Mechanism loan to help not just Paschi but also some of the country's other struggling banks.

The news gave the rest of the sector a lift with shares in HSBC, Royal Bank of Scotland and Standard Chartered in the black.

Meanwhile, the Italian parliament on Wednesday gave its final approval to the government's 2017 budget. Prime Minister Matteo Renzi is expected to hand in his resignation at 1800 GMT.

Elsewhere, equities were boosted by optimism that the European Central Bank will announce an extension of its bond-buying quantitative easing programme on Thursday, when it is due to make its latest policy announcement.

In economic data, the Office for National Statistics revealed UK industrial production in October fell 1.3% compared to September, following on from a 0.4% drop a month ago, while production fell 1.1% versus October last year. Economists had forecast a 0.2% month-on-month rise and a 0.5% annual increase.

Manufacturing production fell 0.4% versus the consensus estimate for a 0.8% rise, while month-on-month the figure dropped 0.9% versus 0.2% forecast.

UK house price growth rose a modest 0.2% month-on-month in November to £218,002, following a 1.5% increase in October, according to Halifax.

In the three months to November, prices were 6.0% higher than in the same period in 2015, having slowed to a three-year low of 5.2% for the three months to October.

The National Institute of Economic and Social Research has estimated UK economic growth remained flat in the three months ending in November. NIESR said its estimate suggested gross domestic product grew by 0.4% in the three months ending in November 2016, as it did in the preceding three months to October.

German industrial production rose less than expected in October, according to figures released by Destatis. Industrial production was up 0.3% from September, when it dropped a revised 1.6%, missing expectations for a 0.8% increase.

In the US, crude inventories fell by 2.4m barrels last week to 485.8m barrels, the Energy Information Administration said on Wednesday.

A day earlier, the EIA raised its oil output forecast for this year and next amid speculation OPEC's deal to cut production from January will bolster US shale production. The EIA lifted its 2016 domestic output forecast to 8.86 million barrels a day from 8.84 million projected in November. It increased its estimate for 2017 to 8.78m barrels a day from 8.73m previously.

At 1628 GMT Brent crude fell 0.84% to $53.46 per barrel and West Texas Intermediate declined 1.19% to $50.33 per barrel.

Among corporate stocks, Rio Tinto surged after Credit Suisse upgraded the stock to 'outperform' from 'neutral' and lifted the price target to 3,600p from 2,750p as it switched its preference from BHP Billiton.

GKN also got a broker note boost as Bank of America-Merrill Lynch upgraded its stance on the shares to 'buy' from 'neutral' and upped the price target to 365p from 350p.

On the downside, WPP lost ground following reports the US Justice Department is investigating claims advertising agencies are rigging the bidding process for contracts on producing commercials in order to persuade clients to use their in-house production units over independent companies.

Unilever was also under the cosh as JPMorgan Cazenove downgraded it to 'neutral' from 'overweight' on a weaker top line as it took a look at the European food/household and personal care stocks.

Shire also got hit by a broker note as UBS cut the stock to 'neutral' from 'buy' and pushed the target price down to 5,000p from 5,600p.

Bunzl retreated as Goldman Sachs cut its price target to 2,200p from 2,400p, maintaining its 'neutral' rating.

Market Movers

FTSE 100 (UKX) 6,902.23 1.81%
FTSE 250 (MCX) 17,625.53 0.99%
techMARK (TASX) 3,230.16 0.22%

FTSE 100 - Risers

Rio Tinto (RIO) 3,221.50p 6.62%
Anglo American (AAL) 1,252.00p 4.81%
International Consolidated Airlines Group SA (CDI) (IAG) 435.10p 4.77%
Lloyds Banking Group (LLOY) 62.27p 4.69%
GKN (GKN) 318.40p 4.50%
St James's Place (STJ) 985.00p 4.40%
Standard Chartered (STAN) 684.70p 4.22%
Old Mutual (OML) 195.60p 4.10%
Prudential (PRU) 1,649.00p 4.07%
Ashtead Group (AHT) 1,617.00p 3.92%

FTSE 100 - Fallers

Shire Plc (SHP) 4,357.00p -4.47%
WPP (WPP) 1,647.00p -2.77%
Pearson (PSON) 784.50p -1.07%
Croda International (CRDA) 3,135.00p -1.01%
Bunzl (BNZL) 2,007.00p -0.94%
Worldpay Group (WPG) 256.60p -0.85%
Unilever (ULVR) 3,111.00p -0.77%
AstraZeneca (AZN) 4,007.00p -0.76%
Imperial Brands (IMB) 3,391.50p -0.40%
Provident Financial (PFG) 2,831.00p -0.25%

FTSE 250 - Risers

Ladbrokes Coral Group (LCL) 127.10p 7.08%
IG Group Holdings (IGG) 513.00p 5.75%
Evraz (EVR) 238.90p 5.34%
BGEO Group (BGEO) 3,278.00p 5.30%
Essentra (ESNT) 426.10p 4.98%
Ocado Group (OCDO) 277.70p 4.63%
Restaurant Group (RTN) 345.10p 4.29%
Capital & Counties Properties (CAPC) 296.60p 4.14%
Paysafe Group (PAYS) 366.90p 3.82%
SSP Group (SSPG) 375.20p 3.82%

FTSE 250 - Fallers

Indivior (INDV) 295.90p -4.89%
Carillion (CLLN) 246.10p -3.90%
Auto Trader Group (AUTO) 384.70p -2.68%
G4S (GFS) 224.10p -2.35%
Greencore Group (GNC) 270.40p -2.24%
Ultra Electronics Holdings (ULE) 1,929.00p -1.83%
Genus (GNS) 1,781.00p -1.83%
Tullow Oil (TLW) 305.40p -1.80%
Aldermore Group (ALD) 224.50p -1.75%
Renishaw (RSW) 2,404.00p -1.63%

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