FTSE 100 week: Good news keeps coming

By PHILIP SCOTT
Updated: 19:01 EDT, 13 November 2009

The FTSE 100 enjoyed a boost this week with better-than-expected unemployment figures and upbeat Bank of England forecasts.

Footsie action: We round up the week's trading

The blue-chip index closed 3% ahead over the trading week at 5,296.38, a robust 51% ahead of its March low.

Market nerves over the UK's economic outlook were eased 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.

In addition the number of Brits claiming jobless benefit tipped-up by its smallest amount in 18 months and the number of people in work rose for the first time in over a year.

But the Bank stressed that the strength of the recovery was highly uncertain and signalled a further three years of weak bank lending.

David Buik, of brokers, BGC Partners, says: 'We are in this era now where the economic news coming through is getting better and a result there is less of a case for selling shares at the moment.

'But the one threat is the dollar, if it strengthens, we could lose 5% as oil and gold would fall back. But it suits the US economy to have a weak dollar for its exports.'

The market was also supported by wider economic news, with one leading survey showing house prices in England and Wales rising last month at their strongest rate in almost three years.

But another report, later in the week claimed that asking prices for properties went into reverse after seven months of rises.

Nevertheless, property groups enjoyed a major boost with Liberty International, the week's highest blue-chip climber, finishing 12% ahead at 504p, while Segro finished 8% better at 373.6p. Hammerson put on 7% to 445p and British Land added 9% to 498.2p.

British Airways shares soared towards the top of the leader board over the week, up 9% to 217p as investors welcomed the news of its £4bn merger announcement with Spain's Iberia. The airline expects to generate £360m a year of savings from the tie-up, which will create the world's biggest airline.

BT followed BA with a 6% rise to 146.7p as it reported a 2% improvement in earnings to £1.44bn for the quarter to 30 September. Also enjoying a week of strong gains following its recent publishing of better than expected first-half profits was Man Group, the world's largest listed hedge fund manager. It shares jumped 12% to 368.1p.

Elsewhere Cadbury lifted 2% to 776p after being the target of a hostile takeover bid from US food group Kraft. Shares in Inmarsat lifted 9% to 649p after surging data revenues helped the satellite operator to lift profits by nearly a third over the past three months.

Shares in Amec fell hardest over the week, down 6% to 801.5p after the energy services provider said its order book is down slightly from the half-year point.

Shares in Barclays and HSBC shot in opposite direction over the week after they both updated the market on trading. HSBC was among the top risers over the week, firming 9% to 741.6p after it reported an improved trend on bad debts and said results were 'significantly ahead' in the quarter to September 30.

Barclays however slipped towards the doldrums, losing 5% to 320p, the group announced a return of its dividend but its profits of £4.54bn for the first nine months of the year were down 19% on last year.

Royal Bank of Scotland increased 1% to 37.44p while Lloyds Banking Group put on a robust 6% to 89.85p after it enjoyed a strong take-up by holders of its debt who are keen to convert this into 'contingent capital' as part of its £21bn capital raising.

On Monday, the gold price smashed through the $1,100 barrier - marking yet another new high. Bullion's boost was delivered on the back of a floundering dollar and rising concerns over central bank policies. Mining shares soared on the news and on the back of a surge in China's factory output.

Xtstrata firmed 5% to 1,014p, Rio Tinto, by 7% to 3,133p, Kazakhmys by 4% to 1,258p and Fresnillo enjoyed a 4% run to 868p while Randgold Resources added 2% to 4,707p.

Sainsbury's pushed 3% ahead to 342.7p, after reporting an 18.5% rise in interim results to £307m. Despite a cautious pre-Christmas trading update from WH Smith, the FTSE 250 firm rose 3% to 525.5p. Tesco added 2% to 425.75p, Marks & Spencer gained 1% to 372.3p while rival Next added 2% to 2,021p and Debenhams gained 5% to 85.85p.

Outside the top flight, building supplies firm Galiform jumped 18% to 90.5p after it reported a 'satisfactory performance' and said sales at its Howden Joinery UK depots were over 3% higher than in 2008. It was joined on the FTSE 250 riser's board by Trinity Mirror, which lifted 8% to 174.7p after it said group sales were down 12% but reported a slowing in the decline seen in advertising revenues.

But white van man group Northgate accelerated 24% to 255p on continued buying ahead of forthcoming interim results in December. In September the board said it was pleased with the performance of the business in the first four months of the year.

THE WEEK AHEAD

Platinum miner Lonmin unveils its finals on Monday while interims arrive from British Land and Icap on Tuesday. Credit checker Experian and Land Securities publish their respective interims on Wednesday. National Grid delivers its interims on Thursday when retailer Morrison also posts an interim management statement.