Nervous gains for FTSE as markets wait on euro decisions
The London market made nervous gains today as traders waited for the details of a eurozone rescue plan set to be hammered out a crunch meeting of politicians.
A late rally saw the FTSE 100 Index close up 27.7 points at 5553.2, having previously been in negative territory amid fears EU leaders would fail to overcome their differences.
Some of the nerves surrounding the talks were eased after German chancellor Angela Merkel cleared a major barrier to the rescue package by winning parliamentary approval for an increase in the eurozone’s bailout fund.
She also indicated that private investors could face a write-down of 50% on their Greek bonds.
EU leaders, who are expected to deliver a statement after the market has closed, are understood to have agreed to a €108bn plan to recapitalise the region’s banks.
The pound was down against the dollar at 1.59 but was flat against the euro at 1.15.
A strong start on Wall Street failed to lift a cloud of uncertainty. The Dow Jones Industrial Average was 0.5% higher as the London market closed after US underlying durable goods orders rose for the second straight month in September and at the fastest pace for six months.
Banking stocks were sold off amid the uncertainty, with Lloyds Banking Group down 2%, or 0.7p at 34.3p, Royal Bank of Scotland off 0.3p at 24.8p, and Barclays 1.4p lower at 178.6p.
The market reacted calmly to weak manufacturing data for October from the CBI, which revealed the biggest drop in confidence for more than two years.
Pharmaceutical and households giant Reckitt Benckiser continued to fall after yesterday’s disappointing third-quarter results.
The Nurofen to Gaviscon firm concerned analysts over the slow growth of its heroin treatment Suboxone and looming competition for its cold remedy Mucinex.
The update sparked a downgrade to sell from hold from brokers Liberum Capital. Shares were 70p off at 3260p.
Heavily-weighted mining stocks offered the market some support, with silver giant Fresnillo up 70p at 1654p.
British American Tobacco was up more than 1%, or 43.5p at 2896p, after it said the number of smokers cutting back in the economic downturn was moderating.
The world’s second largest tobacco company, which has more than 300 brands, said cigarette volumes were down 0.6% year-on-year at 523 billion in the nine months to September 30, compared to a 1% drop last year.
Outside the top flight, Stobart Group saw shares fall nearly 6% after it reported a tough six months for its core transport and haulage business, which includes Eddie Stobart trucks.
The division saw profits fall to £13.7m in the six months to August 31 from £15m last year. Shares were down 7.1p at 118.8p.
The biggest Footsie risers were Fresnillo up 70p at 1654p, Imperial Tobacco ahead 71p at 2280p, Shire up 53p at 2005p, and Randgold Resources ahead 170p at 6880p.
The biggest Footsie fallers were Smiths Group down 42.5p at 928.5p, Land Securities off 18p at 650p, Reckitt Benckiser down 70p at 3260p, and Lloyds Banking Group off 0.7p at 34.3p.
