LONDON (SHARECAST) - Footsie was close to squandering the gains it won in a bright start until better than expected UK gross domestic product figures came to the market's rescue.
Second quarter gross domestic product contracted at a 0.4% quarter-on-quarter rate of change, a revision to the previous estimate of a 0.5% decline. The market had been expecting no change to the previous estimate.
The news was less good on the UK trade front, with the current account deficit widening to an unprecedented Ģ20.8bn in the second quarter from Ģ15.4bn in the previous three month period.
Miners are back in fashion today, after China's central bank pumped record amounts of liquidity into the banking system this week. Rio Tinto, Xstrata and Anglo American were among the big gainers.
In company news, sweeteners group Tate & Lyle said first half adjusted operating profit will be similar to last year's level, in line with expectations. The company saw an improved performance in the second quarter in its Speciality Food Ingredients business. "Overall, while recognising the current level of uncertainty around the wider economy and volatile corn markets, we continue to expect to make progress this financial year," the group said.
Sticking with the food theme, contract caterer Compass said expectations for the full year remain unchanged after a strong performance in the fourth quarter as its US and emerging markets continue to underpin growth. In an update ahead of its annual results, Compass said constant currency revenue growth for the year to September 30th 2012 is expected to be around 8% and organic revenue growth should be 5.5%. Operating profit is expected to increase 8%.
Package tour operator TUI Travel is flying high after it said it remains on track to meet its full year expectations, following strong trading in the summer high season, with improved margins and load factors versus the prior year.
The reshaping of Aviva under Executive Chairman John McFarlane continues apace, with the insurance titan announcing the sale of its controlling interest in its Sri Lankan joint venture, Aviva NDB Holdings Lanka.
Pharmaceuticals colossus Shire is in rude helath after Jefferies Hoare Govett upgraded the stock from "hold" to "buy", and moved the target price up to 2400p from 2100p.
"We anticipate upcoming news to potentially boost expectations for Shire's longer-term organic growth prospects," the broker said, while it sees fewer risks to the firm's lucrative attention deficity hyperactivity disorder (ADHD) franchise from competitors peddling generic versions of Shire's drugs.
Metals prices rose on the futures markets but ended the morning session off their best levels. The most actively traded gold contract is up $2 to $1,755.60 an ounce, while the copper counterpart is up $1.95 to $372.95 a pound.
Brent crude for November delivery is 30 cents dearer at $110.34 a barrel in early London trading.
Investors turn their backs on gilts to ride the equities rally. The yield on the benchmark 10-year gilt is up to 1.72% from 1.69% overnight. Yields move inversely to prices.