Markets: High five as US success boosts banks

By DOMINIC JEFF
Published on 16/10/2012 21:37

A TRIUMPHANT return to third-quarter profit by US investment bank Goldman Sachs persuaded London traders that risk was firmly back in fashion today.

Banks and commodity stocks powered the Footsie more than 
1 per cent higher, with Lloyds adding 6 per cent during the session.

Alastair McCaig, market analyst at IG, said: “So far this week, the big bellwether US equities have all posted expectation-beating results, with Goldman Sachs’s positive report making it five out of five for the big US financial houses and painting a very encouraging picture.”

Barclays and Royal Bank of Scotland added about 4 per cent each, at 246.1p and 280p respectively, but Lloyds was the stand-out performer with shares adding 2.4p to 42.8p amid reports the Financial Services Authority has given it the go-ahead to bolster its finances by swapping assets with its Scottish Widows life insurance arm. The FTSE 100 index was up 64.9 points at 5,870.5.

Car and plane parts maker GKN was the biggest faller after it said a sluggish European automotive market weighed on third-quarter profit, and warned that a continued slump could impact the group for the remainder of the year. Its shares reversed 7.1p at 204.8p.

Newspaper and educational publisher Pearson made late gains after it bought US online learning business Knowledge Universe for $650 million (£400m) in cash. Shares closed 9p higher at 1,243p.

Outside the top flight, 
Edinburgh-based John Menzies enjoyed a fillip after its bitter rival Smiths News signalled a shift from its core business of newspaper distribution, saying it expected half of its profit to come from books and educational supplies by 2016. Smiths’ shares rose 8.3p to 141.5p, with Menzies up 3p at 630.5p.

NEW YORK: The S&P 500 enjoyed its best two-day advance in a month as strong earnings from Johnson & Johnson and other bellwether firms raised hopes for the rest of the US reporting season.

The Dow Jones industrial 
average shot up 127.55 points to close at at 13,551.78. The Standard & Poor’s 500 gained 14.79 points at 1,454.92, while the Nasdaq Composite rose 36.99 points at 3,101.17.