LONDON (SHARECAST) - - All eyes on the ECB
techMARK 1,931.60 +0.36%
FTSE 100 5,331.73 +1.36%
FTSE 250 10,488.06 +1.37%
- UK construction PMI falls in May
- Man Group, miners and banks lead the rise
London's blue chip index was firmly higher by Wednesday lunchtime as investors looked ahead to an interest rate decision in Europe due out this afternoon.
While the European Central Bank (ECB) is generally expected to leave its benchmark interest rate at 1% in a statement expected after midday, some are predicting a 25-50 basis point cut as the sovereign debt crisis shows no sign of abating. Meanwhile, analysts at Barclays Capital were speculating about other stimulus measures: "We look for at least one further LTRO for late June to be announced as a form of insurance for euro area banks in the event that financing conditions for some euro area banks deteriorate significantly in the weeks and months ahead."
In domestic news, the Markit/CIPS UK construction purchasing managers’ index for the month of May came in at 54.4 points, a three-month low, versus the 55.8 seen in April. Nevertheless, the consensus estimate was for a reading of 54.2.
Australian gross domestic product (GDP) rose by 1.3% during the first three months of the year, well ahead of the 0.6% growth expected by analysts. The Reserve Bank of Australia yesterday slashed its interest rate to 3.5%, the lowest level since 2009.
In other news, the latest edition of The Economist said that "even if the European growth outlook is sluggish and no clear end to the debt crisis is in sight, there comes a point when all the bad news is reflected in the price, and contrarians should turn bullish."
FTSE 100: Man up after broker upgrade
Hedge fund Man Group, which has lost 40% of its share price in 2012 so far, was the best performer by midday after Citigroup upgraded its rating on the stock to buy, saying that "Man is now at the end of its downgrade cycle." However, the US broker did cut its earnings estimates for the group today.
Miners were performing well after the better-than-expected GDP data from Australia and rising metals prices; Fresnillo, Vedanta and Kazakhmys had all gained over 5% by lunchtime.
Banks too were putting in a strong performance. Barclays announced this morning that its subsidiary Absa Bank has agreed to buy the accounts and receivables relating to the private label store cards of Edcon Proprietary in South Africa for around £0.8bn. Lloyds revealed that it is to sell a portfolio of Australian real estate loans for £388m. Meanwhile, HSBC said that the merger of its Omani operations with Oman International Bank has been approved and completed.
RBS's shares were trading over the 200p mark today after a share consolidation, which has had the counter-balancing effect of reducing the number of shares each shareholder owns while at the same time increasing the value of each share. Nevertheless, even based on Friday's adjusted share price, RBS shares were still sharply higher, as banking stocks made gains.
Heading the other way was Vodafone after going ex-dividend, meaning that new shares do not have the right to the group's latest pay-out. Vodafone also announced this morning that it is talking with Australian peer Telstra about buying its New Zealand subsidiary, TelstraClear. According to the Financial Times, the deal could be worth around A$300-400m, or £191-255m.
FTSE 250: Resources stocks jump
Second-tier mining stocks were tracking their FTSE 100 counterparts higher with Talvivaara, New World Resources, African Barrick Gold and Avocet Mining making strong gains.
Energy firm Premier Oil rose after seeing an encouraging drilling result on the Carnaby exploration well 28/09-5A in the Central North Sea Block 28/9.
India-focused integrated energy company Essar Energy was also higher after completing its optimisation project at its Vadinar refinery four months ahead of schedule.
FTSE 100 - Risers
Man Group (EMG) 81.50p +7.95%
Royal Bank of Scotland Group (RBS) 215.50p +7.80%
Vedanta Resources (VED) 943.50p +6.79%
Fresnillo (FRES) 1,455.00p +6.13%
Kazakhmys (KAZ) 705.00p +6.02%
Barclays (BARC) 183.55p +5.79%
Antofagasta (ANTO) 1,044.00p +5.35%
Lloyds Banking Group (LLOY) 27.02p +5.05%
Anglo American (AAL) 2,044.50p +4.55%
Shire Plc (SHP) 1,865.00p +4.54%
FTSE 100 - Fallers
Vodafone Group (VOD) 167.95p -3.28%
Tate & Lyle (TATE) 639.50p -2.14%
InterContinental Hotels Group (IHG) 1,455.00p -1.82%
British Sky Broadcasting Group (BSY) 669.00p -1.11%
BT Group (BT.A) 201.50p -0.84%
Morrison (Wm) Supermarkets (MRW) 274.40p -0.69%
Associated British Foods (ABF) 1,160.00p -0.60%
Kingfisher (KGF) 269.30p -0.59%
Sainsbury (J) (SBRY) 285.00p -0.56%
Tesco (TSCO) 297.70p -0.52%
FTSE 250 - Risers
Talvivaara Mining Company (TALV) 143.10p +10.93%
New World Resources A Shares (NWR) 294.00p +9.29%
African Barrick Gold (ABG) 380.20p +8.82%
Centamin (DI) (CEY) 69.65p +6.91%
Lonmin (LMI) 746.00p +6.72%
Taylor Wimpey (TW.) 42.95p +6.63%
Premier Oil (PMO) 350.40p +6.50%
Avocet Mining (AVM) 155.60p +6.21%
Ferrexpo (FXPO) 199.00p +5.96%
Afren (AFR) 110.50p +5.94%
FTSE 250 - Fallers
Bumi (BUMI) 316.80p -4.00%
Dixons Retail (DXNS) 12.94p -3.93%
Senior (SNR) 190.70p -2.85%
Booker Group (BOK) 83.60p -2.79%
Logica (LOG) 107.00p -2.73%
Supergroup (SGP) 294.90p -2.03%
Home Retail Group (HOME) 72.15p -1.84%
Bodycote (BOY) 350.50p -1.74%
BH Global Ltd. USD Shares (BHGU) 11.3 -1.27%
Rank Group (RNK) 119.00p -1.16%