Gains in resources shares and blue-chip heavyweights Vodafone and Unilever pushed London’s FTSE 100 to a year high this morning.
Miners were having another strong run, with Fresnillo advancing 1.7% to 830p, Vedanta Resources 1.3% higher to 2191p, and Xstrata up 1.68% to 969p after announcing the sale of a 70% stake in El Morro to Barrick Gold for $465 million.
Randgold was the only miner in negative territory, however, down 0.8% at 4603p after the Sunday Telegraph recommended taking profits in the gold miner’s shares. The newspaper recommended holding Vedanta Resources and buying Tesco’s shares. In the meantime, the Sunday Mail advised investors to buy companies operating in renewable energy.
Energy majors were also in demand after the price of crude oil jumped over 1%. BP’s share price climbed 1.5% to 550.7p, Cairn Energy added nearly 2% to 2894p and Tullow Oil gained 1.6% to 1227p. BG Group rose 1% to 1112p after the Sunday Times reported that the gas producer received an unsolicited bid for most of its £1.5 billion power generation businesses.
Meanwhile, November Light Sweet crude (WTI) hit $72.6 a barrel, while November Brent crude traded at $70.81 a barrel, predominantly driven by speculation over a recovery in fuel demand and a weaker US dollar.
Banks were in the limelight this morning, after the Financial Times reported that Barclays is preparing to sell off a portfolio of toxic assets worth £4 billion. The bank’s shares fell 0.4% to 375.4p, nevertheless. Lloyds Banking Group retreated 0.4% to 93.62p on reports that it is in the process of announcing an £11 billion rights issue. The Sunday Times reported that Lloyds has appointed UBS and Bank of America Merrill Lynch to act as its lead underwriters for the issue.
Royal Bank of Scotland bucked the sector’s negative trend, gaining 0.44% to 48.55p after The Independent on Sunday reported that its advisors have suggested it lists car insurer Churchill onto the market, a move which could help the bank raise billions of pounds.
Elsewhere, JJB Sports jumped 6.1% to 34.75p after announcing that the board has investigated rumours surrounding Sir David Jones’ personal financial affairs and found the rumours to be unsubstantiated. The troubled sportswear group also confirmed plans that its £100-million rights issue plans are back on track.
There was some bad news for sterling; the Centre of Economics and Business Research today said it sees UK interest rates remaining unchanged at 0.5% until 2011 and suggested the pound could fall to $1.40 and even possibly under parity with the euro.
By 10:30am (London time), the FTSE 100 was trading 59.74 points higher (+1.16%) to 5221.61, while the broader FTSE 250 was 81.57 points (+0.87%) above its previous close at 9458.87. In the meantime, December Dow and S&P 500 futures traded between 0.50% and 0.60% higher, suggesting US equity markets will open higher today.
It is important to note that it is Columbus Day holiday in America today and that US bond markets and government departments will be closed.
The above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.
