Rolls-Royce helps Footsie to take off

Published on Thursday 2 February 2012 00:00

Shares in Rolls-Royce made big gains yesterday after Bank of America Merrill Lynch raised its earnings estimates and target price for the engines manufacturer, helping to push the wider market up by almost 2 per cent.

The bank said Rolls has structural long-term advantages over its peers which are not fully priced in at current levels, and lifted its full-year 2012-13 earnings per share estimates by up to 6 per cent.

Shares in the group gained 4.8 per cent to 770.5p, as investors look to companies that can offer increased earnings in an austere economic environment.

January manufacturing data from China, Europe and the UK showed some signs of recovery and helped bolster the market, with the FTSE 100 Index adding 109.11 points or 1.9 per cent to 5,790.72, just shy of its recent six-month high.

Michael Hewson, senior analyst at CMC Markets, said: “As is normal when investors become more confident, financials and basic resource stocks have benefited the most.”

One of the biggest risers on the Footsie was interdealer broker ICAP, after the company said its fiscal year results would be at the upper end of expectations. It added nearly 8 per cent to 362p.

Shares in asset manager Schroders climbed 8.7 per cent to 1,576p on renewed confidence that a deal on Greek debt will remove some of the uncertainty which has dented markets and exacerbated fund outflows.

Banks were also among the big risers, with Barclays up 11.6p at 224.1p, Royal Bank of Scotland ahead 1.1p at 27.7p, and Lloyds 1.6p higher at 32.2p.

Industrial stocks enjoyed good gains led by Weir Group as the chill winds of winter start to abate in the sector. The Scottish pumps and valves maker added 4.2 per cent to 2,036.7p.

New York: Wall Street extended

January’s rally last night after upbeat global manufacturing data boosted sentiment and Greece neared a long-delayed deal with private creditors.

The Dow Jones industrial average gained 83.55 points, or 0.66 per cent, to close at 12,716.46 while the broader Standard & Poor’s 500 Index rose 11.67 points, or 0.89 per cent, to end the day at 1,324.08. The Nasdaq Composite Index climbed 34.43 points, or 1.22 per cent, finishing on 2,848.27.

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