Markets rise on hopes of euro deal

THE Footsie see-sawed between positive and negative territory yesterday as traders awaited news from the eurozone finance ministers’ meeting in Belgium.

Hopes that a solution may be found to the continent’s sovereign debt crisis helped to push the FTSE 100 index higher, closing up 24.24 points or almost 0.5 per cent at 5,337.00.

Yusuf Heusen, a sales trader at IG Index, said: “Yesterday’s up-down moves on the FTSE couldn’t be more different to Monday’s relentless charge higher, with markets struggling all day to establish a firm direction one way or the other.

“The autumn statement from the Chancellor did nothing to add to confidence among traders, with George Osborne confessing that it would be difficult to prevent the UK from entering a recession next year.”

Traders were encouraged by a stronger-than-expected response at a closely-watched Italian debt auction, where €8 billion-worth (£7bn) of bonds of varying maturities were sold. However, troubles in the eurozone clearly remained as the yield on Italian ten-year bonds hit a euro-era high of 7.89 per cent, firmly embedded in unsustainable levels, while reports suggested Standard & Poor’s could soon downgrade France’s credit rating.

The rumours came a day after rival ratings agency Fitch had issued a warning over the United States’ outlook. But better-than-expected consumer confidence figures in America put investors in a more optimistic mood.

The pound was up against the euro at €1.17 as fears over the single currency persisted and was higher against the dollar at $1.56.

Banks continued to drag on the wider market as fears over the eurozone were compounded by the Chancellor’s announcement to lift the bank levy for the third time this year after admitting it would not raise its annual £2.5 billion target. Lloyds Banking Group was 0.5p lower at 23.2p, although insurer Prudential bucked the trend in the financial sector by gaining 12.5p to 610.5p.

International Airlines Group, which operates as British Airways and Iberia, fell 1 per cent – or 0.6p to 145.2p – after it emerged that American Airlines had filed for bankruptcy protection in the United States. BA has a code-sharing agreement with the US airline but said it welcomed the steps being taken by American.

In a quiet session for corporate results, Topps Tiles staged a fightback after its share price fell on news that like-for-like sales declined 6.9 per cent in the seven weeks since the end of September, having been down 2 per cent over the previous financial year. Shares pulled back into the black to stand 2 per cent higher, up 0.5p at 23.5p, as analysts opted to leave their 2012 forecasts unchanged.

There was a poor response to an update from toy distributor Character, which reduced its sales forecasts for its current financial year to August but said it hoped a range of toys set to be launched over the next few months will help it outperform the toys market. Shares were off 7.5p at 150p.

Among the Scottish stocks, Glasgow-based temporary power supplier Aggreko was near the top of the Footsie risers’ board, climbing 3.7 per cent or 65p to 1,841p.