LONDON (SHARECAST) - The Footsie's earlier gains were pared by lunchtime as US stock futures slipped ahead of key earnings report from JP Morgan Chase & Co and the University of Michigan Consumer Sentiment Index.
Italy issued €4.75bn in medium-term debt, the top of its €3-4.75bn target range. The borrowing costs of July 2014- and November 2014-maturing notes fell while the yield on the August 18 bill rose slightly.
Analysts at Unicredit said: "we regard today’s auction as overall positive and the relatively weak demand for the three-year as mainly due to technical issues (...) Demand was a bit lower for the BTP Nov14 (EUR 3.6bn for a cover of 1.2x) but note that, following the changes in the Italian Treasury's issuance policy, this was the second re-opening of this bond in only two weeks, which must have weighed on the auction. Moreover, over the last few days this bond has rallied sharply."
Meanwhile, there are mixed reports regarding Greece surrounding the likelihood, or not, of an agreement on ‘private sector involvement’. The head of the Institute for International Finance (IIF) has been cited as saying that Greek authorities and private creditors are far from an agreement, but Societe Generale’s Chief Executive seems to have said the opposite to journalists at Les Echos.
BANKS RISE, INVENSYS PLUMMETS AFTER PROFIT WARNING
RBS rose strongly, extending gains from yesterday after it revealed a massive shake-up to its investment banking and wholesale businesses, including a mass employment reduction of 3,500. Seymour Pierce fuelled gains after upgrading the stock from reduce to buy. Sector peers Barclays, Lloyds and Standard Chartered were also in demand.
The big news on the corporate front today was on the FTSE 250 with engineering and software group Invensys issuing a profit warning. The company said that a number of operational issues relating to certain projects within Invensys Operations Management and Invensys Rail will put a dent in operating profits. Shares dropped over 20%.
Leading the mid-cap index was instrumentation and controls company Spectris which notched up record sales and operating profit in 2011, helped by useful contributions from recent acquisition, while Balfour Beatty and WS Atkins rose after securing contracts with Network Rail.
Broker round-up: Vodafone fell despite Nomura upgrading the stock to buy; Bunzl was lower after UBS downgraded it from buy to neutral; Citi downgraded RSA Insurance from buy to neutral; while BT was in demand after Nomura upgraded the firm from reduce to buy.
SMALL CAP MOVERS
Falkland Oil and Gas, one of the firms hoping to discover substantial oil resources around the Falkland Islands, tumbled 7% despite raising £48.5m to fund an enhanced drilling programme.
Fashion brand Ted Baker said it had a very good Christmas trading period despite, as usual, not embarking on any significant promotional activity. Shares rose 5%.
Non-woven industrial materials group Fiberweb dropped after its 2011 profit and loss account swung into the red and revenues slumped.
Education software firm Tribal Group surged after unveiling a strong performance in the final quarter of the year, saying adjusted pre-tax profit for 2011 will be 'significantly' ahead of the board's previous expectations.
Hot Tuna, the troubled surf wear retailer, tumbled after announcing that it is selling itself to Brand Holdings for £950,000. Shares were down 37% at midday.
FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 24.40p +6.09%
Ashmore Group (ASHM) 357.20p +4.81%
ICAP (IAP) 336.20p +4.22%
Vedanta Resources (VED) 1,108.00p +4.14%
Barclays (BARC) 200.05p +3.41%
Lloyds Banking Group (LLOY) 29.95p +2.74%
Resolution Ltd. (RSL) 266.80p +2.73%
Standard Chartered (STAN) 1,484.50p +2.59%
Kazakhmys (KAZ) 1,073.00p +2.09%
IMI (IMI) 876.50p +2.04%