FTSE in-depth: Seeking security in defence stock
Defence stocks were in focus after a review of all air freight was announced by the government following the discovery of a bomb hidden in a printer cartridge sent to the US from Yemen.
Security: Scanning and detection device maker Smiths Group jumped up the leaderboard
Scanning and detection device maker Smiths Group jumped up the leaderboard, gaining 40p to 1232p in anticipation of a surge in business, as airports around the world clamp down on passenger and freight security in light of the heightened terrorist threat.
Second-liner QinetiQ, which helps to make robots that diffuse bombs, rose 3.8p to 111.2p. BAE Systems jumped 8.4p to 353.1p, boosted by news that the FBI has shortlisted it for an IT contract worth as much as £18.7bn, covering its Washington headquarters and its Criminal Justice Information Systems Division, among others.
With all eyes focused on central bank meetings later in the week, gains on the Footsie were subdued. The blue chip index ended up 0.34% higher at 5694.62.
Across the pond, US stocks were equally ambivalent, managing to edge into positive territory by a mere 0.41% by London's close.
The Federal Reserve is set to decide whether to print more bills or cease their quantitative easing policy on Wednesday, while the Bank of England meets on Thursday for a similar summit.
Still, mining stocks put on a robust performance after stronger-than-expected Chinese manufacturing data spurred bullish growth hopes for the sector. Xstrata led the blue chip advance, with gains of 45p to 1254.5p.
Shares in Antofagasta gained 19p to 1341p ahead of results on Wednesday. The Chilean copper producer shrugged off a downgrade to 'under-perform' from Credit Suisse analysts, citing better growth prospects elsewhere in the sector.
Evolution said: 'We have no real concerns regarding Antofagasta's operational capabilities, but view the company as expensive. We see much better value in its closest peer Kazakhmys.' Shares in Kazakhmys were 23p higher at 1339p.
Second-line miners were equally well bid, with Kenmare Resources 0.95p higher at 20.35p after JP Morgan firmed its price target to 30p from 20p and raised earnings estimates for the current year, 2011 and 2012. The broker expects strong demand from emerging markets as China enters its next phase of development, and sees a recovery in demand in the west.
Elsewhere, Ferrexpo, which supplies iron ore to steel producers in China, India and Turkey, rose 10.6p to 335p, and Aquarius Platinum, the world's fourth largest producer of platinum, advanced by 9.5p to 369.8p.
Banking stocks were in focus ahead of third-quarter results this week, with Lloyds up 0.66p at 69.6p and Royal Bank of Scotland 0.97p higher at 45.58p.
Meanwhile, Footsie losers were led by Desire Petroleum, which came under pressure after announcing problems with the well bore on its Rachel exploration well in the North Falklands.
'Nothing appears to go right for Desire', said Panmure Gordon. The shares dropped 5p to 92p.
Serco shed 27p to 587p after attempting to squeeze suppliers in order to deliver cost savings requested by the government.
The group, which runs the London bike hire scheme, as well as schools and prisons, was downgraded by Numis to 'reduce' from 'hold'. Retailers Marks & Spencer and Next were sold off ahead of results, with M&S 7.4p off at 420p and Next down 46p at 2239p.
Second-liner BTG was buoyed by an upgrade to 'add' from 'neutral' by Evolution analyst Simon Conway, ahead of results later in the week. The broker raised his price target to 250p from 200p, in expectation that pivotal late-stage trials for Varisolve, its varicose vein treatment, will start before yearend. The shares added 8p to 250p.
Hikma Pharmaceuticals firmed 9.5p to 795.5p after buying Baxter's injectable generics business for £69.83m cash, in a deal that will catapult the pharmaceutical group to being the second-largest supplier of injectable generic medicines to the US, the world's largest market for drugs.
Dominic Valder of Evolution Securities called the deal 'transformational' and upgraded the stock to an 'add' with an 8.50 price target. UBS lifted its price target to 880p from 805p.
On the downside, oil services group Hunting shed 8p to 636.5p after JP Morgan revised forecasts, trimming back 2011 and 2012 to reflect a more conservative drilling outlook ahead, but upgrading 2010 based on its well construction business.
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