Retail giants gift FTSE a boost

Published on Wednesday 4 November 2009 20:20

LONDON FTSE 100 CLOSE 5,107.9 +70.7

RETAIL bellwethers Next and Marks & Spencer led strong gains on London's blue-chip share index yesterday, as economic and corporate news buoyed stocks.

Reassuring updates on trading from the two high street giants added to data showing growth in the key services sectors in the UK and the US.

The FTSE 100 index closed up 70.7 points at 5,107.9, having surged about 80 points higher at one stage, as Wall Street reacted well to the economic data.

America's Institute for Supply Management said service industry activity grew for a second straight month in October, while in the UK the latest services survey revealed the strongest reading since September 2007.

The Dow Jones Industrial Average lifted more than 1.2 per cent in early trading, with encouraging US employment figures showing the seventh straight month of declining job losses also boosting investors.

Mic Mills, senior trader at ETX Capital, said: "Tuesday's fall looked to have been overdone, and shares have bounced back, but confidence remains fragile ahead of tonight's news from the Fed and the Bank of England's pronouncements tomorrow."

Oil prices jumped above the $80-a-barrel mark ahead of the US Federal Reserve's announcement on interest rates. The surge in the cost of oil gave a boost to Scottish companies, with Cairn Energy up 5 per cent or 132p to 2,775p and Melrose Resources adding 9.5p to close at 331.5p.

M&S climbed more than 6 per cent after reporting profits of 298.3 million for the six months to 26 September and a decent start to the third quarter. The figures, which were above market expectations, helped shares cheer 20.5p to 361.5p.

Next also powered close to the top of the Footsie risers board after it said the consumer climate had been "more benign than we anticipated". Next rose 6 per cent – or 102p higher at 1,912p – after lifting its sales forecasts for the rest of the year.

Elsewhere in the sector, Home Retail Group – which owns Argos and Homebase – added more than 5 per cent, or 15.3p, to 299.2p, while B&Q-owner Kingfisher was 7.6p dearer at 231.7p.

Meanwhile, the part-nationalised banks had a reversal of fortune after Tuesday's shake-up.

Royal Bank of Scotland clawed back some of Tuesday's 7 per cent fall, following the announcement of break-up plans and a 25.5 billion capital injection from the state. Shares were up 0.54p to 36.47p.

But Lloyds was a chief faller, having topped the winners board on Tuesday in the wake of its rights issue announcement and avoidance of the UK government's toxic asset scheme. Shares were down 1.04p at 86.29p.

Among the other blue-chip stocks in negative territory were index heavyweights GlaxoSmithKline and Shell, down 7p to 1,221.5p and 5.5p to 1,796.5p respectively. The duo turned ex-dividend, meaning investors are no longer entitled to the latest pay-out.

Housebuilders dominated the risers' board in the FTSE 250 index after Taylor Wimpey said market conditions were "significantly better" from 1 July to date than last year, with cancellation rates at 16 per cent, against 46 per cent in 2008. Taylor Wimpey is also looking to push through higher selling prices.

The company's shares rose 8 per cent, or 3.03p, to 40p, while Persimmon added 40.7p to 424p and Barratt lifted 15.4p to 136.3p – a hike of 13 per cent.

FirstGroup rose 5 per cent, or 18.7p, to 393.9p, despite the Aberdeen-based transport giant reporting a 71 per cent slide in operating profits at its Greyhound US coach division. The group's interim pre-tax profit slumped by 44 per cent to 30.3m.