FTSE close: BT Group, BA up; 3i, Amec down

 

The Footsie trod water today despite strong showings from BA and BT Group.

London Stock exchange

A negative open on Wall Street could not take the index into the red, and the FTSE 100 managed to stay 9.7 points above water to close at 5,276.5.

The Dow Jones opened down, after Asda parent Wal-Mart cautioned over the all-important fourth quarter, which overshadowed news of the retail giant's 3.2% increase in third-quarter profit.

British Airways soared to the top of London's leading share index today amid speculation of an imminent announcement of its long-awaited merger with Spanish flag carrier Iberia.

Shares lifted more than 8% - up 15p at 215p - in anticipation of a deal with Iberia after the boards of both firms met to consider a tie-up. Reports also suggested that discussions were pointing towards BA getting 55% of the enlarged group.

The merger is also expected to result in BA's Willie Walsh becoming chief executive of the combined company, with Iberia's Antonio Vazquez Romero taking on the chairman's position.

BT followed BA with a 5% rise as it reported a 2% improvement in earnings to £1.44bn for the quarter to September 30, helped by cost cutting as BT battles to restore profitability at its global IT services division.

Shares, which hit a record low earlier this year, lifted 5.2p to 147.2p.

Retailers were among other risers, despite a cautious pre-Christmas trading update from WH Smith. The second-tier stock still rose 7p to 517p as its 4% fall in high street like-for-like sales was slightly better then expected.

Among top flight firms, Argos owner Home Retail Group added 8.6p to 313.2p and B&Q firm Kingfisher lifted 7.3p to 247.2p.

GlaxoSmithKline put on 13p to 1,259p, helped by a target price hike from UBS, and with Barclays Capital initiating coverage on the firm with an 'equal-weight' rating.

AstraZeneca, which Barclays also started as 'equal-weight', put on 0.5p to 2,747.5p. The same broker started the European pharma sector with a 'neutral' rating.

Barclays rebounded from falls seen since its third-quarter trading update on Tuesday, as Morgan Stanley and ING both lifted their price targets for the firm. Shares were 1.1p higher at 324.1p.

3i Group shed 11.4p to 267.5p in the wake of its first-half results. The British private equity firm said asset values increased just 2% in the first half of its financial year as the real economy failed to keep up with rebounding stock markets.

Shares in Amec fell 43.5p to 822.5p after the energy services provider says trading is in line although its order book is down slightly from the half-year point.

Seymour Pierce moved to 'hold' from 'buy' on the stock. 'The low hanging fruit has nearly all been picked and we await the announcement of the new strategy for the next phase,' the broker says.

Shares in the company have gained over 75% so far this year.

Outside the top flight, building supplies firm Galiform jumped 10% - up 8.35p to 89.95p - after it reported a 'satisfactory performance' and said sales at its Howden Joinery UK depots were over 3% higher than in 2008.

It was joined on the FTSE 250 Index risers board by Trinity Mirror, which lifted 9p to 177.7p after it said group sales were down 12% but reported a slowing in the decline seen in advertising revenues.

Stobart Group rose 5p to 127p after the freight company won a distribution contract with Unilever UK. The three-year £60m contract covers transport for the majority of Unilever's manufacturing and distribution activities in the UK.

'Although the financial impact may be relatively modest, winning another blue chip customer contract does emphasise the attractiveness of the Eddie Stobart model and the strength of this core business,' says Arbuthnot analyst Gerald Khoo.

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