US interest rate hopes boost FTSE
Renewed hopes of interest rate cuts in the US lent strength to the London market today as the FTSE 100 Index gained more than 1%.
Worse-than-expected consumer confidence figures saw Wall Street make early gains in anticipation of a further cut from the US Federal Reserve to stimulate the economy, with stocks in London picking up the buoyant mood.
After a quiet start, the Footsie gained 85 points to 6661.3 as blue chips also took impetus from high commodity prices and takeover activity.
The leading Footsie riser was B&Q owner Kingfisher, which gained 7%, or 12.2p, to 185.3p amid vague bid rumours. Analysts noted almost 70 million shares traded - double the daily average – and added that traders could be covering positions after short-selling the stock.
Gains for mining and oil heavyweights also provided the momentum ahead of the weekend break, helped by a mix of higher copper and nickel prices, as well as continued Chinese demand.
Xstrata was up 187p to 3528p, with sector peers Rio Tinto – up 182p to 4417p - and Antofagasta, ahead 31.5p at 849.5p, also making gains. Kazakhmys added 40p to 1464p.
Record oil prices touching above 92 US dollars a barrel also lent weight to oil majors amid fears over supply and fresh Middle East tensions. Royal Dutch Shell advanced 62p to 2121p on the higher prices, while BP gained 16.5p to 629p.
Asian-facing bank Standard Chartered was on the up, gaining nearly 5%, or 84p, to 1805p. Investors waded in on renewed bid speculation over fresh stakebuilding from Singapore-based investment fund Temasek.
Meanwhile the Resolution takeover provided an intriguing side-show today as investors digested more twists in the £5bn (€7bn) battle for the closed-life funds manager.
Sceptical shareholders responded to Standard Life’s £4.9bn (€7bn) recommended offer for Resolution by driving its shares 3% lower, but this changed to a 3% gain after Pearl Assurance announced a rival proposal an hour later.
Standard Life shares eventually finished 2.25p higher at 278.5p – less than 1% ahead as investors speculated that Pearl Assurance will scupper the Edinburgh-based insurer’s hopes of landing Resolution. The bid target benefited from the battle, up 17p at 726.5p, but Resolution’s former merger partner Friends Provident shed 0.8p to 174.9p.
The leading Footsie faller was supermarket giant Sainsbury’s, down 18.5p at 565.5p after a Takeover Panel deadline gave its Qatari suitor until November 8 to make a firm offer. Elsewhere in the sector Morrisons fell 4.75p to 297.75p.
British Energy was also down 10p to 538p on rumours that the boiler problems announced by the company this week could lead to long-term delays.
The biggest Footsie risers were Kingfisher up 12.2p at 185.3p, Xstrata ahead 187p at 3528p, Standard Chartered up 84p at 1805p and Rio Tinto up 182p at 4417p.
The biggest Footsie fallers were Sainsbury’s off 18.5p at 565.5p, Yell down 12.5p at 439.25p, BAE Systems down 12p at 503p and Centrica off 8.25p at 364.25p.
