Results outweigh euro fears for FTSE

A RAFT of earning reports from some of Britain’s biggest companies yesterday ensured the London market overcame increased uncertainty in the eurozone.

The FTSE 100 index was 1 per cent higher at 5,567.34 after a busy session for corporate results, with Marks & Spencer, Vodafone and Lloyds Banking Group all updating the market.

Yields on Italian benchmark bonds were close to breaking fresh records after Italian leader Silvio Berlusconi passed a budget vote but less than half of MPs voted, meaning he lost his parliamentary majority and his future as prime minister was thrown into further doubt.

Berlusconi’s main coalition ally urged him to step aside before the crunch vote, with many investors believing a new government would enact additional austerity measures that could help Italy cut its massive debt burden.

Kathleen Brooks, research director at Forex, said the problems had not gone away following yesterday’s events. She said: “The markets crave certainty and the political upheaval in Italy makes things in Europe even more uncertain.”

Lloyds topped the FTSE 100 risers’ board despite a dip in third-quarter profits and a warning it may miss medium-term targets. Shares were up 4 per cent, or 1.2p, to 28.9p, as analysts noted an improved trend in the bank’s bad debts and said the absence of any shocks in the third quarter results was a welcome development.

M&S shares lost earlier gains to stand 2.5p lower at 323.5p after the company saw its margins squeezed. Chief executive Marc Bolland said this was a price worth paying given the current trading climate.

Primark owner Associated British Foods has also been impacted by the rise in cotton prices, causing profits in its retail arm to fall by 8 per cent to £309m in the year to 17 September.

Yesterday it pledged to continue with Primark’s expansion while group profits were up 1 per cent to £920m as it benefited from higher margins in its sugar production arm. Shares rose 16p to 1,128p.

Vodafone rose 3.1p to 176p after it said operating profits for the full year were likely to be in the upper half of the £11 billion to £11.8bn range estimated earlier this year.

The good cheer extended north of the Border where sausage skin maker Devro said sales volumes have remained strong in the second quarter of the year, particularly in Europe and Russia. Shares gained 2.5p to 252.2p

Oil firm Cairn Energy’s stock rose slightly on an update on the firm’s Greenland drilling. It said one well was showing “potential interest because of oil and gas shows”, while the second has “encountered minor hydrocarbon shows”. Shares were up 0.9p to 289p, as Cairn continues to explore the region.

But stock in troubled insulation manufacturer Superglass dropped by 20 per cent to a meagre 1.7p as investors chewed over the details of a restructuring and fundraising announced late on Monday, which includes a debt-for-equity swap with its lender Clydesdale Bank.

The Stirling-based firm raised £9.5m in cash and transferred 23 per cent of its equity to the bank while reducing its debt pile from £17.7m to £5.1m.