FTSE 100 close: GDP data boosts shares

By Dan Hyde
Updated: 12:03 EDT, 28 August 2009

Positive data for the UK economy helped the London markets into positive territory today.

Update: Latest from the London markets

Official figures showed that GDP for the UK fell by 0.7% in the second quarter, which was slightly less than initial figures had suggested.

Hetal Mehta, senior economic adviser to the Ernst & Young ITEM Club, said: 'With recent survey data showing the economy in a much healthier state, we expect third-quarter GDP data to show a marked improvement and a positive outturn could be on the cards.'

The news was welcomed on the markets and, despite a poor opening few hours for the Dow Jones on Wall Street, the FTSE 100 closed 39.6 points up at 4,908.9.

For the Dow it marked a rare journey downwards after a barnstorming week, and the index lost 34.92 points to fall to 9,545.7.

The FTSE is now up 6.3% for August and has now rallied 41.5% since hitting an all-time low in March.

Burgeoning optimism in the mining sector had helped Footsie to a decent start, with the blue-chip index climbing in early trading despite low transactions volumes as the City prepared for the holiday weekend.

Kazakhmys, up a full 5.5% or 51.5p at 988.5p, impressed analysts yesterday with better-than-expected trading figures, while Xstrata put on 34.5p to 826.5p and Fresnillo added 22.5p to 623.5p with most miners benefitting from rising metal prices. Eurasian Natural Resources lifted 35p to 865p.

Banks, too, were in positive ground with government-owned Lloyds Banking Group, 6.64p better at 111.34p. The rise came after shareholders demanded that the board of the bank be streamlined, in return for backing a fundraising from Lloyds aimed at reducing its exposure to the government's Asset Protection Scheme, according to the Times.

Royal Bank of Scotland also saw a 2.1p rise to 57.65p, and Barclays made a strong start, up 11.35p to 380.25p.

A good day of trading for US stocks yesterday, due in part to a rebound in oil prices which have stabilised above $72, helped to foster a broad rally in Asian stocks. And energy companies felt the gains in London, with BP, up 6.3p at 532p, Royal Dutch Shell up 18.5p at 1,711p.

The biggest riser in the FTSE 250 Index came from Restaurant Group after the Garfunkel's operator posted better than expected half-year results and said woes in the property sector would not derail its expansion plans.

Shares jumped 9.77% or 17p to 191p.

Meanwhile, shares in newspaper publisher Johnston Press rose 9.35% after half-year results showed signs of stabilisation for advertising revenues

At the other end of the scale, Serco group shares dropped 3.02p despite the support group releasing a positive announcement last Wendesday. Christopher Hyman, Chief Executive of Serco Group plc, said: 'This has been a strong first half. We were awarded record level of contracts, entered a number of important new markets, and delivered a strong financial performance.'

Tuesday's agenda

Economic data will be hitting the headlines when the Office for National Statistics publishes the latest figures on July's consumer credit and mortgage approvals for the same month.

Property experts will be hoping to see more green shoots in the sector after recent data from the council of Mortgage Lenders reported that mortgage lending rose 26% in July, compared with the previous month.

But the lending was still down on any historic comparison, and economists will be keen to find out whether the Government's data can shed any more light.

THe Purchasing Managers' Index for manufacturing is another indicator of the UK's economic health to be published on Tuesday. The Index rose above 50 in July, for first time since March last year, indicating that the sector is expanding again.

Veterinary product maker Dechra Pharmaceuticals will be updating the market on its preliminary results, after chief executive Ian Page said earlier in the year that he couldn't conceive of any major risks to the firm's own health. British pets are one of the last things to face cutbacks in a recession, and Dechra was recently earmarked in a positive note by broker Investec but investors will want to know more about the firm's product pipeline.