FTSE close: Sainsbury, IP up; Reed down

 

The London market got a boost today from better-than-expected unemployment figures and upbeat Bank of England forecasts.

The sign and logo of the London Stock Exchange

The number of Britons claiming jobless benefit rose much less than expected last month and by its smallest amount in 18 months, while the number of people in work rose for the first time in over a year.

The FTSE 100 index had put on 36.2 points to 5,266.7 by the close. Market nerves over the UK's economic outlook were also assuaged by the Bank's quarterly inflation report, which forecast a strong return to growth in 2011, and inflation returning to low levels after a blip early next year.

But the Bank's quarterly report stressed the strength of the UK economic recovery was highly uncertain and signalled a further three years of weak bank lending.

A surge in China's factory output pushed metal prices higher and boosted miners. Fresnillo led the leaders' board with a 6% or 51.5p gain to 894p, and Randgold Resources was clsoe behind with a 262p jump to 4,839p.

Rio Tinto, which climbed 75p to 3188p after broker Credit Suisse raised its target price to 3300p and said the company had outperformed rival BHP Billiton (46.5p up at 1816.5p).

Sainsbury's was one of the Footsie's leading risers after reporting an 18.5% rise in interim results to £307m - bettering the £300m expected in the market. The chain's shares rose 10.6p to 338.2p - or 3% - despite offering caution about slowing sales growth over the months ahead.

Power station group International Power was another strong gainer as it predicted that 2009 earnings will match last year's level. While UK and US markets remain challenging, shares rose 7.1p to 264.3p.

In broker moves, Morgan Stanley has raised its rating on Standard Life, up 5.5p at 221.1p, from underweight to equalweight, and its target from 211p to 260p. The broker continues to have an underweight rating on Prudential, 11.5p better at 605.5p, but has moved its target from 553p to 645p.

Utility firm Scottish & Southern Energy lost ground on news it is facing pressure from rising wholesale gas prices and operating costs. Shares fell 7p to 1073p, even though the company posted a 36% rise in half-year profits and said it was on track to meet full-year expectations.

Reed Elsevier was the leading Footsie faller, down 19.5p to 465p, after the publisher said chief executive Ian Smith had left the company less than a year into the top job.

Fellow publisher Johnston Press was moving in the opposite direction, ahead 3%, up 1.25p to 28.25p after it confirmed ongoing improvement in advertising revenues. The Scotsman and Yorkshire Post owner said ad declines had eased to 19.1% in the 10 weeks to October 31 - substantially better than the 32.7% plunge seen in the first half of its year.

Royal Bank of Scotland was the biggest faller in the financial sector, easing 0.66p to 38.37p.

Shares in Micro Focus jumped 20% or 68.5p to 410.5p after it said a strong performance from its recent acquisitions, Borland and Compuware's testing unit, will help first-half earnings beat expectations.

Broker Singer says the contribution of Borland and Compuware numbers alone could drive a 15% upgrade to estimates.

Rajeev Bahl at Piper Jaffray also sees the update as a trigger for continued upgrades. 'With Micro Focus now having confirmed that core trading remains robust and that it is outperforming on acquisition integration we continue to view Micro Focus as a key sector holding,' he said.

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