FTSE 100 Thursday close: 4,500 a bridge too far
The 4,500 level is proving an obstinate barrier for the Footsie, despite gains for banking stocks today.
Catching fire: Will a higher oil price boost shares?
But the FTSE 100 made some headway, after a late boost from Wall Street saw it close 25.1 points higher at 4,461.9.
On Wall Street, the Dow Jones was up 82.7 to 8,821.7 after the open. Neil Mackinnon, chief economist at ECU Group, told AP newswire that his bullish outlook for stocks is being tempered by the rise in oil prices above $72 a barrel and mounting speculation that the US Federal Reserve will raise interest rates sooner than expected.
'I also note that stockmarket volumes are fading and this is a bearish sign, so beware,' he warned.
Banks topped the risers' board amid further speculation about how UKFI, the Government body responsible for taxpayer stakes in the state-backed banks, could recover part of the country's £70bn investment.
One theory is that an exchangeable bond would allow UKFI to sell RBS and Lloyds stock at a premium to the prevailing price, potentially profiting on the investments before the shares have returned to the Government's entry level.
RBS shares rose 1.8p to 39.7p following the report in the Daily Telegraph, while Lloyds added 1.7p to 66.7p. In a strong session for the financial sector, Barclays added 16p to 304.5p and HSBC gained 12.25p to 548.25p.
GlaxoSmithKline was another strong gainer, up 26.5p to 1,058.5p, after Morgan Stanley raised its rating to 'equal-weight' in a review of European drug stocks, with the broker raising its sector view to 'attractive' from 'in-line'.
Peer AstraZeneca gained 33p to 2,517p after a US advisory panel said that its antipsychotic medication, Seroquel, appeared safe and effective overall in treating children and teenagers with schizophrenia or bipolar disorder.
Invensys shares gained 12.5p to 241.5p after Goldman Sachs upgraded the engineering firm, which makes industrial controls and automation systems, to 'buy' from 'neutral'.
Goldman said the group was 'weathering the downturn better than we had expected' and raied its earnings forecasts. Goldman also upgraded Tomkins – 6.25p up at 160.5p - to 'buy' from 'neutral'.
Travel group Thomas Cook was another winner, up 2.75p to 221.75p, as traders continued to speculate about the 52.8% stake held by collapsed German retail group Arcandor.
The main corporate news of the session came from Home Retail Group after it reported the first positive sales figures from its Homebase DIY chain in two years. The demise of MFI and Woolworths helped trading, and Home Retail shares went 5p higher to 271p.
B&Q owner Kingfisher failed to benefit as shares slid 3.4p to 193.6p.
The mood was positive elsewhere in the sector as hopes the recession may soon be over lifted consumer-related stocks. Currys owner DSG International rallied a penny to 27.25p while Tesco rose 5.7p to 363.3p ahead of a trading update next week.
In the FTSE 250, Shaftesbury was a faller after activist investor Laxey Partners offloaded its 19% stake, just days after backing the company's £150m rights issue. Shares in the London retail property company fell 8.75p to 300p.
Shaftesbury owns large chunks of real estate in London's Soho and West End shopping districts. Laxey's stake in the company was valued at around £130m pounds.
TOMORROW'S AGENDA
• Independent News & Media is likely to update the market on trading at its annual shareholder meeting. Investors will be hoping to hear how talks are progressing over the €200m (£172m) bond that is being refinanced by the Irish media group. Its second biggest shareholder, Denis O'Brien, has said there is less than a 50% chance it will succeed.
INM warned last month that it was in serious danger of breaching its banking covenants this year. The Independent and Independent on Sunday owner is under pressure to sell assets and has refused to rule out selling its flagship titles.
• High Street bellwether John Lewis publishes its weekly sales figures. Last week, the retailer said takings were down 8.2% on the previous year as shoppers opted to bathe in the sun rather than shop. Its Oxford Street store was less afflicted, with only a 3.7% drop, as its benefited from currency-conscious Europeans coming to the capital to buy.
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