FTSE close: Vodafone, Amec up; RBS, Lloyds down

By ADRIAN LOWERY
Updated: 12:17 EDT, 2 December 2009

London's blue-chip share index paused for breath today after the 2.3% bounce-back seen in the previous session.

The FTSE 100 index stood 2.9 points higher at 5,315.1 by late afternoon, with a gold price boost helping miners but with banks losing heavily.

It eventually closed the day 15.22 points higher at 5,327.39.

Futures trading pointed to a similar opening on Wall Street as global stocks settle after the heightened volatility seen in recent days amid revelations of Dubai's debt crisis.

'After Tuesday's bounce back it's no real surprise that investors are taking a breather today with little about to inspire fresh direction,' said Mic Mills, senior trader at ETX Capital. 'All eyes now focused on Friday's US jobs report as the Dubai drubbing fades into the memory.'

World markets soared yesterday as they shrugged off fears over debt-ridden Dubai, clawing back some of the hefty losses seen after the country's woes first emerged.

The Dow Jones Industrial Average closed overnight at its highest level since October last year, while indices across Europe also banked solid gains.

In London, commodity shares were in favour today amid a fresh surge for gold to a new record price of around $1,217 an ounce as the greenback continued to be snubbed by investors.

Platinum miner Lonmin was the Footsie's biggest riser, cheering 3%, or 60p, to 1,911p. Eurasian Natural Resources, was 2% better at 915.5p, Rio Tinto added 82p to 3,292p and Kazakhmys gained 30p to 1310p.

Broker comment also provided support. Vedanta Resources added 59p to 2,445p as Goldman Sachs raised its rating to 'buy' from 'neutral' in a review of the European metals and mining sector. The broker downgraded its stance on Anglo American – 9p higher to 2,721p - to 'neutral'.

Software group Sage was another top riser, up almost 3%, or 6.4p, to 221.1p - after the group reported a 2% fall in pre-tax profits, but said it was encouraged by a contract renewal rate of 81%.

Royal Bank of Scotland was among the top flight's biggest fallers - down 2% - after the Times newspaper said the Treasury had demanded control of Royal Bank of Scotland's bonus pot.

As part of the terms of its deal to insure bad debts, the Government wants to dictate both the 'quantum and shape' of the payouts at the bank for 2009. This fuelled fears about RBS's competitive position as shares slipped 0.72p to 33.55p.

Fellow part-nationalised lender Lloyds Banking Group fell 2%, or 1.04p at 53.1p but Barclays firmed 1.45p to 297.5p and HSBC lost 3.3p to 722.7p.

A raft of stocks also slipped as they turned ex-dividend, meaning that new investors are not entitled to the next shareholder payout. This hit National Grid, down 15.5p at 652.5p, and utility giant Severn Trent, which eased 19p to 1030p.

Mobile telecoms heavyweight Vodafone added 3.05p to 143.05p as Credit Suisse hiked its target price to 160p from 150p while oil services firm Amec rose 17.5p to 829p as Evolution Securities upped its rating to 'buy' from 'add'.

Publisher Reed Elsevier gained 3.7p to 467.2p, benefiting from its inclusion in a UBS key call list in a 2010 strategy review.

Both UBS and ING were optimistic for the prospects for European equities in 2010, citing an upturn in the economic cycle, but both said defensive sectors would outshine cyclical sectors like technology and financials.