The FTSE retested the 4600 levels again this morning, but struggled to maintain those gains as investors locked in profits; perhaps on the view that it has come up too fast.
Heavyweight resource firms helped support the FTSE this morning, as investors continued to buy equities in the sector on the belief that they are well positioned for the global economic rebound.
Shares in Lonmin climbed 2.74% to 1277p, Kazakhmys rose 1.8% to 825p while Antofagasta advanced 1.9% to 764p. Energy majors BP and Tullow Oil benefitted from a rise in crude oil prices, meanwhile, with the former up 1.5% to 518.55p and latter 0.7% higher at 985.5p.
Banks relinquished earlier gains, with Barclays down 0.7% to 312.75p, HSBC declining 1% to 568.3p and Standard Chartered losing 0.7% to 1350p. In contrast, Lloyds Banking Group and Royal Bank of Scotland outperformed, gaining 3.9% to 81.02p and 2.4% to 43.02p respectively.
It is also worth noting that Chancellor Alistair Darling is planning to call on banks to reduce the cost of loans they offer to small businesses, as he seeks to prevent the economy from slipping further into a recession.
In the wider financial services sector, life insurer Friends Provident announced that it has ended talks with potential acquirer Resolution. Friends Provident said it rejected the buy-out firm’s fresh takeover approach over the weekend. Shares in the company eased 0.11% to 70.70p. It will be interesting to see if Resolution turns its interests to a rival life insurer.
Elsewhere, building supplies company Wolseley revealed that trading conditions remain in line with expectations, and that it believes that property market conditions are likely to remain challenging for the rest of 2009.
Wolseley said that although there were signs of a recovery in the new homes market, others segments, such as commercial and industrial property markets, were still deteriorating. The company also revealed that its debt fell by £108 million to £1.4 billion by the end of June and that its cost cutting programme could help it save just under £200 million this year. It also decided to sell its Belgian, Slovakian and Czech businesses as a result of a strategic review. Wolseley's shares edged 0.6% higher to 1208p.
Publishing group Pearson rallied 9% to 661p this morning, after announcing that it is trading ahead of expectations. The company said that it benefitted from expanding its international education business and reduced reliance on advertising revenue. The owner of the Financial Times and Penguin books also said it anticipates its 2009 adjusted earnings per share to come in 3 cents higher than earlier expectations at 57.7p. This forecast assumes the GBP/USD exchange rate of $1.64 prevails in the second half, however.
'Over the past six years, Pearson has delivered substantial growth; this year is about proving our resilience and competitive edge,' said its chief executive Marjorie Scardino in a statement. 'So far, we've passed the test.'
Gas and electricity company National Grid was also in the headlines, stating that it is on track to deliver a strong performance in 2009/10. However, its shares didn't react strongly to this news, rising a mere 0.2% to 564p.
Bus and rail firm Stagecoach was also in the limelight today. The company confirmed that it is in exclusive talks with a group of potential buyers, including Spain's Cosmen family and private equity firm CVC, over the possibility of acquiring rival National Express and breaking up the company.
However, the Financial Times reported that National Express would reject another offer, from the consortium. Shares in National Express climbed 3.5% to 358p while Stagecoach fell 1.8% to 135p.
In macro news, Hometrack said that UK house prices were flat for a third consecutive month in July, and, as a result, the year-on-year decline in prices came in at 7.7% from 8.7% the month before. Hometrack said a recovery in UK house prices was still a long way off, explaining that a rise in domestic unemployment and a tightening of mortgage lending will take its toll on house prices.
In the meantime, credit ratings agency Fitch said that recent positive trading results in the UK retail sector are likely to be temporary.
By 10.30am (London time), the FTSE 100 was down by 5.21 points (-0.11%) to 4571.4, while the broader FTSE 250 was 74.26 points in the red (-0.94%) at 7864.18.
Looking ahead to the US, Wall Street is expected to open higher today, as September Dow and S&P 500 futures traded around 0.15% higher. It is also worth noting that new home sales are scheduled for release at 3pm (London time).
