LONDON (SHARECAST) - - Stocks shrug off Spanish bailout concerns
techMARK 2,142.83 +0.33%
FTSE 100 5,835.68 +0.26%
FTSE 250 11,911.98 +0.38%
- RBA cuts rates
- Babcock and Wolseley rise strongly after updates
After a poor start on Tuesday, the FTSE 100 had swung into positive territory by lunchtime with gains from Babcock, Wolseley and International Consolidated Airlines (otherwise known as IAG) providing a lift in London.
Stocks opened in the red as investors digested news that Spain may be ready to move ahead with its bailout request to the Eurozone. According to media reports though, Germany now wants Spain to hold off due to internal political pressure. On Friday, the southern European country received a long-awaited report noting that its financial sector needs €59.3bn in additional capital.
Markets are also reacting to comments made last night by Federal Reserve Chairman Ben Bernanke, in which he defended the Fed's decision to launch the latest round of monetary stimulus. He also blamed the current US fiscal policy for not doing enough to bring down the boles rate.
"Bernanke’s comments were a staunch reminder to the markets that while central banks are doing everything in their power to improve conditions, the people who have the real power to improve the economy are unlikely to achieve anything soon," said market analyst Craig Erlam from Alpari.
Australian stocks surged overnight after the Royal Bank of Australia surprised many with a rate cut, slashing its key interest rate by 25 basis points to 3.25%. Whilst highlighting concerns over the outlook for the global economy, Governor Glenn Stevens also said that investment in the mining sector next year "may be at a lower level than earlier expected".
In domestic news, the UK economy came out of recession in the third quarter, according to the British Chambers of Commerce (BCC). Its survey of 7,593 UK firms showed the economy grew by 0.5% between July and September, following three consecutive quarters of contraction.
Meanwhile, the UK construction sector purchasing managers’ index for the month of September has come in at 49.5 points, up from the previous month’s reading of 49 but below the consensus estimate of 49.8.
FTSE 100: Babcock leads the rise after solid update
Engineering support firm Babcock was performing well this morning after saying it was enjoying buoyant markets as customers turned to it to make cost savings. Jefferies, Seymour Pierce and Investec all hailed the first-half trading update as "in line", maintaining their 'buy' ratings for the stock saying that the business is "well positioned".
Rumours of a special dividend from Wolseley have proved to be on the money, with the plumbers' merchant paying 40p on top of the full-year divi of 60p. The stock was one of the top risers on the Footsie today.
Airline group IAG was a high riser on news that Qatar Airways is joining the oneworld alliance.
Pharma giant AstraZeneca was extending losses after announcing yesterday that it had suspended its share repurchase programme with immediate effect. Credit Suisse cut its forecasts for the group this morning, saying that this "will likely mark the start of further EPS downgrades at AZN".
Investec has upgraded its recommendation for retail-focused real estate investment trust Hammerson from 'sell' to 'hold', providing a lift for the shares.
FTSE 250: FirstGroup gains after first-half update
Transport firm FirstGroup was in demand after saying that trading in the first half has been in line with its expectations with strong growth being seen in the company's UK Rail division.
John Laing Infrastructure Fund (JLIF) was higher after reported it had successful raised over £60m in a share issue that was significantly oversubscribed.
FTSE 100 - Risers
Babcock International Group (BAB) 956.00p +3.63%
Wolseley (WOS) 2,757.00p +2.76%
Randgold Resources Ltd. (RRS) 7,855.00p +2.48%
International Consolidated Airlines Group SA (CDI) (IAG) 157.90p +2.33%
Fresnillo (FRES) 1,918.00p +1.97%
Rio Tinto (RIO) 2,994.50p +1.92%
Tesco (TSCO) 337.25p +1.89%
BAE Systems (BA.) 333.10p +1.80%
Burberry Group (BRBY) 1,031.00p +1.68%
Eurasian Natural Resources Corp. (ENRC) 320.70p +1.65%
FTSE 100 - Fallers
Lloyds Banking Group (LLOY) 38.99p -2.45%
Royal Bank of Scotland Group (RBS) 260.50p -2.21%
Amec (AMEC) 1,135.00p -1.73%
Schroders (SDR) 1,548.00p -1.53%
Croda International (CRDA) 2,470.00p -1.24%
Standard Chartered (STAN) 1,420.00p -1.08%
Severn Trent (SVT) 1,690.00p -0.88%
Diageo (DGE) 1,756.50p -0.87%
SSE (SSE) 1,389.00p -0.79%
Carnival (CCL) 2,280.00p -0.61%
FTSE 250 - Risers
Bumi (BUMI) 161.00p +7.48%
Unite Group (UTG) 272.50p +3.77%
Bodycote (BOY) 410.40p +3.43%
COLT Group SA (COLT) 122.40p +2.94%
CSR (CSR) 333.60p +2.80%
Rightmove (RMV) 1,621.00p +2.79%
Telecom Plus (TEP) 843.50p +2.74%
Berendsen (BRSN) 565.00p +2.73%
Petra Diamonds Ltd.(DI) (PDL) 122.90p +2.42%
Fenner (FENR) 409.60p +2.40%
FTSE 250 - Fallers
Bank of Georgia Holdings (BGEO) 1,200.00p -6.10%
NMC Health (NMC) 190.00p -2.91%
IP Group (IPO) 119.30p -2.69%
Hunting (HTG) 830.00p -2.41%
Jupiter Fund Management (JUP) 249.00p -2.05%
Diploma (DPLM) 474.40p -1.84%
Kentz Corporation Ltd. (KENZ) 432.30p -1.03%
Aveva Group (AVV) 1,964.00p -1.01%
RPS Group (RPS) 252.50p -0.98%
Filtrona PLC (FLTR) 526.00p -0.85%