ECB 'whatever it takes' pledge boosts world markets
A pledge from the boss of the European Central Bank to do “whatever it takes” to keep the euro together washed world markets with a wave of optimism today.
ECB president Mario Draghi’s resolute comments at a conference in London was taken as a sign that he may restart buying Government bonds to ease the pressure on Spain’s borrowing costs.
Markets turned sharply higher, with London’s FTSE 100 Index building on earlier gains to climb 1.4%, or 75 points to 5573.5.
The Dow Jones Industrial Average in the US was up 1.8% despite a fall in durable factory goods orders suggesting that the world’s biggest economy continues to slow.
Germany’s Dax and France’s Cac40 were up 2% and 3% respectively.
And Spanish bond yields, which have pushed beyond 7.5% in recent days amid fears the country will need a full-blown bail-out, eased back down below 7%.
The euro was also boosted, rising to 1.28 against the pound.
Meanwhile, in a busy session for corporate updates in London, ITV surged 7% after its 15% jump in half-year underlying profits to £235m more than offset expectations for weaker advertising revenues in July and August.
Shares rose 4.7p to 76.1p while BSkyB was 22.8p higher at 707.8p after it posted record annual operating profits of £1.2bn and unveiled plans for a further £500m share buyback.
The broadcasters were joined on the risers board by Rolls-Royce after the engine giant reported a 7% rise in underlying profits and said its order book now stood at £60.1bn, up 4% on a year earlier.
Shares lifted 7% or 57p to 886.5p as Rolls revealed a record-breaking 1,100 orders for a new Trent engine that will help reduce jet emissions by 16%.
But Royal Dutch Shell was the biggest faller in the top flight after the oil giant reported a sharper-than-expected drop in profits.
Chief executive Peter Voser insisted the Anglo-Dutch company was “moving forward in volatile times” but a 13% fall in second quarter profits due to declining energy prices was well below City hopes. Shares were down 43p at 2222p.
However, rival BP, which is due to report figures next week, was 4.3p higher at 432.6p.
Lloyds Banking Group saw the lender slip onto the fallers board after it took an additional £700m hit for mis-selling payment protection insurance.
The 40% state-owned bank revealed pre-tax losses of £439m for the six months to June 30, compared with a £3.3bn loss a year earlier. Shares were 0.2p lower at 29.1p.
Meanwhile, the UK’s second-biggest pharmaceuticals group AstraZeneca said core pre-tax profits dropped by a quarter to $5.1bn and revenues fell 16% to $14bn.
Astra, whose chief executive David Brennan quit in June after shareholder pressure following profit warnings and poor performance, said nearly all the revenues fall came as a result of generic competition. But shares reversed earlier falls to rise 19p to 2928p.
