FTSE close: Banks firm; M&S, Thomas Cook up

By ED MONK FOR THISISMONEY.CO.UK
Updated: 12:34 EDT, 8 February 2011

17.25 (close)

Watching brief: The index has gained in four out of the last five trading sessions.

The FTSE 100 Index pushed to a fresh two-and-a-half-year high today after the banking sector shrugged off Government plans to increase the rate of its new levy.

The London market closed ahead despite weighty mining stocks suffering losses as investors feared China's decision to raise interest rates would weaken the country's hunger for commodities.

The Footsie clawed back earlier losses to finish up 40.3 points to 6091.3, its highest point since May 2008.

Chancellor George Osborne's decision to change the terms of the banking levy to raise an additional £800m this year was not enough to deter investors from banking stocks, with Barclays and Royal Bank of Scotland closed up 1.6p to 314.4p and 0.3p to 44.5p respectively.

HSBC was also up 12.1p to 718.1p and Lloyds was ahead 1.4p to 66p.

The pound was down against both the euro and the dollar, at 1.61 and 1.18 respectively, as it lost gains from earlier in the week when investors speculated the Bank of England will raise interest rates on Thursday.

Marks & Spencer's success in poaching a senior Tesco executive Laura Wade-Gery to lead its internet expansion caused the retailer's shares to jump more than 4%, up 13.5p to 373.3p.

The appointment should help chief executive Marc Bolland's quest to lift web sales from £400m to at least £800m by 2013/14.

Stocks on the back foot included Essar Energy off 5.5p to 528p, Eurasian Natural Resources slipped 15p to 1029p and Kazakhmys down 9p at 1622p.

Some of the stocks to make progress in a strong session yesterday gave back a slice of their gains, with chip designer Arm Holdings off 16p at 595p and Cairn Energy, down 10.4p to 425p.

In corporate results, BG Group shares added 30p to 1470p after fourth quarter figures exceeded market expectations as higher energy prices helped the exploration giant offset a drop in oil and gas production.

BG also upgraded its long-term production targets, notably for Brazil and the United States.

Thomas Cook shares rose 2% despite its warning that political unrest in travel hotspots Egypt and Tunisia would hit second-quarter profits by around £20m.

Analysts said the rest of the winter offered encouragement, while the company has looked to offset the North African pressure by switching customers to different holiday destinations. Shares rose 4.3p to 197.8p.

The biggest Footsie risers were GKN up 11.1p at 210.4p, Marks & Spencer ahead 13.5p to 373.3p, Inmarsat up 25p to 713p, and African Barrick Gold ahead 17.5p at 537.5p.

The biggest Footsie fallers were Arm Holdings down 16p to 595p, Cairn Energy off 10.4p at 425p, Petrofac down 33p to 1517p, and Tesco off 6.1p at 396p.

15.00: The Dow Jones has opened slightly higher, as expected.

In eary trade on Wall Street the Dow was 13 points higher at 12.174.27.

Bank in London, the FTSE 100 has hardly budged over the session today, 0.56 points down at 6050.47.

14.00:

The futures markets are expecting US markets to open slightly higher. We'll know within hour if they're right.

Back in London, the FTSE 100 is now just 20.36 points lower at 6048.67.

13.00:

Still no big move for the Footsie. At lunchtime the FTSE 100 is 12.8 points off at 6038.25.

In the corporate diary, Thomas Cook reported a 7% rise in revenues to £1.8bn in the last quarter of 2010. And it managed to cut underlying operating losses by 10% to £37.3m in what is normally a quiet and loss-making quarter.

The good news outweighed fears over Egypt and Tunisia, and Thomas Cook shares are 3.1p, or 1.6%, higher today at 196.6p.

11.40:

The FTSE 100 is still treading water, down 12 points at 6,039.07.

Shares in Premier Foods slipped 0.05p to 22.8p after it offloaded its canned grocery operations to Princes in an £182m deal. We have more on that news here.

In currency, the pound at 10am was $1.6126 compared to $1.6109 at the previous close. Against the euro, the pound was at €1.1848 compared to €1.1883 at the previous close.

10.15:

The FTSE 100 held firm today as banks shrugged off an unexpected tax hit, with M&S higher on a key hire and Thomas Cook unfazed by the unrest in Egypt.

The blue-chip index struggled for direction in early trade and settled 5.5 points lower at 6045.51.

Bank shares were closely watched after Chancellor George Osborne announced he was making the levy on bank profits permanent, raising an extra £800m this year and £2.5bn every year.

In response, the City merely shrugged. Banks shares hardly moved after the announcement, indicating that the extra tax is not seen by investors as being significant.

In the hour after the announcement, Barclays slipped 3.2p to 309.55p, with HSBC 0.5p lower at 705.5p, Lloyds down 0.11p to 64.46p, and Royal Bank of Scotland, 0.18op lower at 44.04p.

Marks & Spencer's success in poaching a senior Tesco executive to run its internet business caused the retailer's shares to jump more than 1% today.

The appointment of Laura Wade-Grey, which was announced after the market closed yesterday, should help chief executive Marc Bolland's quest to lift web sales from £400m to at least £800m by 2013/14.

M&S shares were 6.5p higher at 366.3p, although the FTSE 100 Index failed to extend gains seen on Monday as it retreated 11.4 points to 6039.8.

Thomas Cook shares were up 2% despite its warning that political unrest in travel hotspots Egypt and Tunisia would hit second-quarter profits by around £20m. Analysts said the rest of winter trading update appeared positive as the stock lifted 4.2p to 197.7p.

Meanwhile, household products group McBride fell 8% or 11.5p to 136.6p after reporting a 26% drop in half-year operating profits.