FTSE close: Miners rise; M&S lower

By Ed Monk for Thisismoney.co.uk
Updated: 12:25 EDT, 24 May 2011

17.10 (close)

Marks & Spencer was the FTSE 100 Index's top faller today despite posting a 13% rise in annual profits as analysts fretted that its results could be "as good as it gets" for the retailer.

The retail bellwether, which has enjoyed a strong run in recent weeks, fell 11.4p to 385.6p, or nearly 3%, as investors looked beyond the rise in full-year profits to £714.3m and noted the company's cautious comments on trading this year.

Despite a share slide at M&S, the FTSE 100 Index staged a modest recovery following Monday's major sell-off and rose 22.5 points to 5858.4.

The pound was down against the euro at 1.15 after the single currency benefited from stronger economic data from Germany, but was up against the dollar at 1.62.

Miners were among the biggest risers after benefiting from today's improved sentiment and rising oil and metal prices.

This helped offset some of the heavy losses seen yesterday in the London blue chip index following fears over the eurozone debt crisis and faltering Chinese growth.

Cairn Energy was among the top risers, up 16.6p to 435.8p, or 4%, after saying it plans to spend around 600m US dollars (£371.4m) drilling near Greenland this summer.

However, London's progress was stunted by a difficult session for UK banks after Moody's said 14 of the 18 banks and building societies it covers were in danger of ratings downgrades due to the withdrawal of emergency support for the industry.

Such a move would mean higher funding costs for the banks and meant Lloyds Banking Group fell 1.1p to 49.7p and Royal Bank of Scotland dropped 0.4p to 40.4p.

Barclays and HSBC were down 2.7p to 265.6p and 3.2p to 623.5p, even though they were excluded from the Moody's list.

The update from M&S did little to ease nerves in the retail sector, with chief executive Marc Bolland warning there was major uncertainty over the outlook.

The mood was shared by broker ING, which said that while profits were better than expected the performance could be as good as it gets given the tough UK retail climate.

Other retailers on the back foot included Primark owner Associated British Foods, which fell 11p to 1067p, while supermarket group Tesco dropped 1.6p to 413.3p.

The session was also notable for the full market debut of commodities trader Glencore, which will tonight become the first company in 25 years to be fast-tracked into London's FTSE 100 Index.

Glencore shares are still lower than their starting price of 530p after dropping to a low of 506p during conditional trading last week before recovering to around 525p today.

Its place in the top flight is at the expense of engineering firm Invensys, which will be demoted to the FTSE 250 Index. It fell 2.1p to 293.1p.

The biggest Footsie risers were Fresnillo up 54p at 1356p, Cairn Energy ahead 16.6p at 435.8p, Aggreko up 57p at 1769p, and Antofagasta ahead 36p at 1196p.

The biggest Footsie fallers were Marks & Spencer down 11.4p at 385.6p, Lloyds Banking Group off 1.1p at 49.7p, International Consolidated Airlines Group down 4.2p at 230.8p, and ITV off 0.9p at 68.1p.

15.15: The Dow Jones has indeed moved up - 17.3 points (0.14%) to 12,398.6 - as stronger oil prices led a rebound from yesterday's session when stocks closed at their lowest in a month.

Both US crude and Brent futures rose more than 1.5% after Goldman Sachs raised its forecast for oil, citing strong fuel demand growth.

'The move today is as much of a reaction to yesterday as anything else,' said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. 'It's especially helpful to have energy higher today, since that was one of the worst performing sectors yesterday.'

The Footsie continues its steady yet modest rise, now up 45 points to 5,880.7.

Retailers on the back foot include Dixons Retail Group after a drop of 0.4p to 19.5p and a decline of 2.2p to 412.7p for supermarket Tesco.

Miners were the major beneficiaries of today's improved sentiment, offsetting some of the heavy losses seen yesterday on fears over the eurozone debt crisis and faltering Chinese growth.

Cairn Energy was the top riser, up 20.8p to 440.1p, or 5%, after saying it plans to spend around £371.4 million drilling near Greenland this summer.

Glencore shares are currently at 528p (up 2.6%).

13.30:

Futures trading points to a higher open on the Dow Jones later following yesterday's stock rout.

US investors are awaiting new home sales data which analysts anticipate will show growth.

The FTSE 100 is up 33.4 points at 5,869.3.

12.05:

Shares in newly-floated Glencore are undershooting the starting price of 530p on their first day of official trading.

The stock was at 526.5p just before midday – after dropping to a low of 506p during conditional trading last week.

We have more here about the mammoth flotation, which is set to propel the commodities giant straight into the FTSE 100 tonight, dislodging Invensys in the process.

The FTSE 100 is 28.8 points higher at 5,864.7.

11.00:

Banks are under pressure as investors react to the news that they face a possible ratings downgrade because the UK government has refused to guarantee their survival.

Lloyds Banking Group and Royal Bank of Scotland are two of the 14 institutions that ratings agency Moody's today put under review because it thinks any future banking crises will not be met with taxpayer-funded bailouts. Read the full story here.

Barclays is 0.9p lower at 267.35p, while Lloyds is off 0.29p at 50.58p. But RBS has edged up 0.12p to 41p.

UK borrowing figures came in below target in April as tax revenues fell away, placing a question mark over the Government's deficit reduction programme.

Public sector net borrowing, the amount which the UK borrowed above what it brought in through tax, was £10bn in April, up from £7.3bn for the same month a year ago. We have more here.

M&S shares are down 7.5p at 389.5p after the retailer reported a jump in annual earnings but sounded a note of caution about trading in the current 'challenging' economic climate.

The full story, including reaction from City analysts, can be found here.

The FTSE 100 is 32 points higher at 5,867.9.

Yusuf Heusen, senior sales trader at spreadbetter IG Index, commented: 'Today's subdued start to trading in London is hardly surprising with concerns about European sovereign debt still hanging heavy, and the threat of a downgrade for some UK lenders from Moody's.

'Whilst Monday saw significant sell-offs across most sectors, it is still difficult to see bargain hunters coming in with any meaningful intent at these levels with so many potential stumbling blocks to confidence.'

Brent crude is trading just below $111 a barrel today. Gold was fixed this morning at $1,520.75 an ounce compared with $1,510.50 at the previous close.

09.30:

The FTSE 100 made gains today despite uncertainty of the banks' credit ratings, while M&S stood still despite better profits and a hike to its dividend.

The Footsie set about recovering the heavy losses from yesterday, and by 9.15am was 21.81 points higher at 5857.7.

Bank shares will be under close watch after ratings agency Moody's confirmed it would review its ratings in light of reduced systemic support from the Treasury and Bank of England.

Several institutions are likely to see downgrades and Lloyds Banking Group, 0.49p down at 50.38p, and Barclays, 1.6p down at 266.65p, were among the fallers today.

Marks & Spencer's shares failed to make headway today despite better-than-expected profits and a 14% hike in its dividend payment to shareholders.

The retail stock, which has enjoyed a strong run in recent weeks, fell 5.3p to 391.7p, as investors looked beyond a 13% rise in full-year profits to £714.3m and noted the company's cautious comments on trading this year.

The wider London market steadied after fears over the eurozone debt crisis and faltering Chinese growth caused the FTSE 100 Index to fall by more than 100 points on Monday.

With miners putting back some of the earlier losses, the top flight stood 20.1 points higher at 5856.5.

The session was also notable for the full market debut of commodities trader Glencore, which was 10.25p higher at 524.25p. The price is still below Thursday's grey market starting price of 540p, which valued the London-based firm at more than £36bn.