FTSE 100 close: Shares slow but Kazakhmys gains

By ED MONK FOR THISISMONEY.CO.UK
Updated: 12:00 EDT, 27 August 2009

The FTSE 100 struggled for direction as trading slowed before the bank holiday weekend, despite good new from mining giant Kazakhmys.

Looking ahead: How will shares react after losses yesterday?

The mining group topped the FTSE 100 Index risers board after its first-half results topped market expectations.

Kazakhmys initially jumped over 4% after the miner reported that it's annual output is set to exceed 300,000 metric tons as the company will produce an additional 15,000 tons from stock-piled material. This was ahead of expectations. Stocks later closed 2.13% up at 937p.

The news offered little help to the Footsie, which closed 21.2 points down at 4869.4, having finished lower last night after a run of six sessions in positive territory.

The FTSE has rallied by 42% since hitting an all-time low in March and has so far rebounded 10% this year thanks to brightening economic data and improving corporate earnings.

Analysts, however, said September could see a period of consolidation on the index after low trading volumes during the summer holiday period.

Philip Gillet, sales trader at IG Index said: 'There is not much news out this week that is driving the index. It is just sitting on its hands. At the moment it is pretty directionless.'

Other mining stocks were lifted by the update in early trading but Antofagasta later closed 11.5p down at 740.5p.

Royal Bank of Scotland, which set a nine-month high last night, was given a further boost today by an upgrade from broker KBW. But shares took a tumble in late afternoon - falling 1.86% 55.5p. Barclays rose 5.9p to 368.9p but Lloyds Banking Group slipped 3.48p to 104.7p and Standard Chartered eased 38p to 1376p.

Drinks giant Diageo was lower - down 4.06% or 40.5p to 956p - after it forecast a challenging 2010 and predicted slower profits growth in the year ahead. Results for 2009 were at the lower end of expectations with profits of £2bn.

Engineering services firm Amec was another casualty on a busy day for corporate results, as shares fell 31p to 746.5p after the company reported a 4% drop in pre-tax profits due to difficult trading conditions.

Strength in oil companies provided support as crude prices steadied, with Royal Dutch Shell, BG Group, Tullow Oil, and Cairn Energy all up in early trading. All but Tullow later closed in the red.

Drugmakers were also higher, led by a 1% rise in GlaxoSmithKline, while AstraZeneca put on 0.9%.

Tomorrow's agenda

The highlight of the week in the economic world will be the office for national Statistics' first revision of gross domestic product in the second quarter. The ONS's initial statistic that the British economy shrank by 0.8% in the second quarter made it among the worst of the big economies, and some experts think it will be adjusted upwards to a slightly more positive outlook.

Recruitment firm Robert Walters will update the market on its interim trading figures, expected to show, like rival Michael Page's results earlier this month, that difficult conditions persist across the jobs sector. Panmure Gordon sees 'little to suggest why any optimism for the next 12 months or so can be justified at Robert Walters (or indeed at any other recruiter)'.

Advertising giant aegis has been praised for its cash-generative qualities - broker Altium reckons it is an attractive stock that could see bidding activity when mergers and acquisitions activity returns - but investors will be keen to find out about the progress of the company's plan to unlock cost savings when it publishes quarterly trading figures. Altium notes that aegis's stock has underperformed the market by around 16% over the past three months, a performance it describes as 'anomalous'.