London close: Footsie climbs as Shell pleases

The top flight index closed higher on Tuesday, with Anglo-Dutch pair Shell and Unilever impressing with their strategy updates but investors having mixed feelings about the Bank of England's stress test results.

By the London close, the FTSE 100 was up 1.04% to 7,460.65, while the pound was down 0.61% against the dollar at 1.3238 and 0.45% lower against the euro at 1.1186.

European markets were also upbeat with the DAX up 0.46% to 13,059.53, the CAC 40 0.57% firmer at 5,390.48 and the IBEX 35 climbing 0.81% to 10,144.40.

Earlier, the Bank of England said none of the seven high street banks needs to strengthen its capital position as a result of its stress tests, the first time this has happened since tests were launched in 2014.

In the test, banks incurred hypothetical losses of around £50bn in the first two years of the stress, which, the Bank said, would have wiped out the common equity capital base of the UK banking system ten years ago.

Although none of the banks failed the stress tests, Barclays and Royal Bank of Scotland fell below their systemic reference points, which are the capital ratios required to withstand any shocks to the financial system without needing a bailout.

But analysts at Exane BNP Paribas said the outcomes of this stress scenario "are somewhat negative for the UK domestic banks" and "raises questions over the speed to dividend normalisation".

Stocks in the banks were all lower apart from HSBC, with Lloyds leading the retreat, followed by Barclays.

Analyst Mike van Dulken at Accendo Markets said equities were extending their positive start to the week, as sentiment was supported UK Banks passing the latest stress tests.

"A stronger USD also plays a part on a combination of pre-released text from next Fed Chair Powell, ahead of his appearance in front of the Senate Banking committee, and hopes of tax reform. All the while we await Thursday's OPEC make or break update on production cut extension," he said.

While the OECD revised down its growth forecast for the UK to 1.5% this year, from 1.6%, in line with recent OBR forecasts, the organisation upped its forecasts for 2018, to 1.2% from 1%.

Top of the FTSE leaderboard was Royal Dutch Shell after saying it will begin paying a cash dividend again in the fourth quarter of this year as a strategy update from the oil giant saw cash flow targets and pledge to continue cutting debt.

Fellow Anglo-Dutch giant Unilever, ahead of its annual strategy event, said the current year remained on track and said its review of its dual-headed legal structure was ongoing but that it considered a share unification with a single share class "would be in the best interests of Unilever and its shareholders as a whole".

Comments from Unilever that cost savings and budgeting programmes were "delivering faster than planned" and would be reinvestment in brands, boosted advertising group WPP, for which the consumer goods colossus is one of its biggest clients.

Budget airline EasyJet flew higher after upgrades from Kepler Cheuvreux and Societe Generale, while insulation specialist SIG was boosted by upgrade to 'buy' at Jefferies and Cineworld rose after Numis lifted it to 'buy'.

Shares in Ocado surged as much as 20% after the online grocery retailer said has signed an agreement with Groupe Casino to develop its Smart Platform in France.

West End real estate developer Shaftesbury was in the black as it posted a jump in full-year profit and beat consensus forecasts for its net asset value.

Food producer and supplier Cranswick rallied as it reported a rise in profit and revenue for the first half and hiked its dividend by 15%, while Provident Financial climbed as the doorstep lender announced boardroom changes after the death of chair Manjit Wolstenholme.

On the downside, heavily-weighted miners declined as copper prices fell, with Glencore, BHP Billiton and Antofagasta all on the back foot.

Irish food company Greencore was slightly in the red, but had erased most of its early losses after it posted a 74% drop in pre-tax profit for the year to the end of September.

Pets at Home tumbled on the back of its interim results and as it announced CEO Ian Kellett will step down from the role, to be replaced by Peter Pritchard, who is currently CEO of the retail division.

AstraZeneca lost its early gains after saying that the European Medicines Agency has accepted a variation to the Marketing Authorisation Application for Tagrisso, while UDG Healthcare was weaker despite reporting a 17% increase in full-year profit.

Associated British Foods climbed despite a Morgan Stanley downgrade but recovered to positive territory by midday, while Dixons Carphone fell by just over 2% after a downgrade from Stifel.

Market Movers

FTSE 100 (UKX) 7,460.65 1.04%
FTSE 250 (MCX) 20,026.19 0.73%
techMARK (TASX) 3,496.79 0.90%

FTSE 100 - Risers

Royal Dutch Shell 'A' (RDSA) 2,408.00p 3.99%
Worldpay Group (WPG) 432.60p 3.94%
Royal Dutch Shell 'B' (RDSB) 2,455.00p 3.71%
Babcock International Group (BAB) 685.00p 3.16%
Reckitt Benckiser Group (RB.) 6,641.00p 3.04%
Mondi (MNDI) 1,800.00p 2.97%
WPP (WPP) 1,301.00p 2.60%
ITV (ITV) 155.00p 2.51%
Old Mutual (OML) 200.00p 2.46%
Mediclinic International (MDC) 539.00p 2.37%

FTSE 100 - Fallers

Convatec Group (CTEC) 190.00p -2.46%
Persimmon (PSN) 2,540.00p -1.89%
Anglo American (AAL) 1,405.00p -1.75%
Glencore (GLEN) 352.00p -1.68%
Rolls-Royce Holdings (RR.) 870.00p -1.42%
Paddy Power Betfair (PPB) 8,675.00p -1.31%
Antofagasta (ANTO) 933.00p -1.27%
Lloyds Banking Group (LLOY) 64.83p -1.01%
Barratt Developments (BDEV) 595.00p -1.00%
BHP Billiton (BLT) 1,379.50p -0.93%

FTSE 250 - Risers

Ocado Group (OCDO) 309.60p 20.84%
Cranswick (CWK) 3,276.00p 8.58%
Cineworld Group (CINE) 695.00p 6.11%
IP Group (IPO) 148.00p 5.92%
Genus (GNS) 2,326.00p 5.20%
SIG (SHI) 172.40p 4.80%
Ultra Electronics Holdings (ULE) 1,276.00p 4.42%
Fisher (James) & Sons (FSJ) 1,629.00p 4.02%
RPC Group (RPC) 964.50p 3.82%
FirstGroup (FGP) 106.90p 3.70%

FTSE 250 - Fallers

Pets at Home Group (PETS) 160.60p -10.63%
Sophos Group (SOPH) 607.00p -6.04%
TalkTalk Telecom Group (TALK) 142.10p -5.96%
Dignity (DTY) 1,746.00p -5.93%
Kaz Minerals (KAZ) 765.00p -4.55%
TBC Bank Group (TBCG) 1,535.00p -3.59%
Vedanta Resources (VED) 730.50p -3.24%
Hansteen Holdings (HSTN) 138.00p -3.23%
UDG Healthcare Public Limited Company (UDG) 838.50p -3.02%
Dixons Carphone (DC.) 154.00p -2.10%