Date: Friday 25 May 2012
- Consumers upbeat in US, Germany
- Germany adviser says Greek bailout terms should be changed
- Greek uncertainty still apparent
The FTSE 100 rallied to close slightly higher on Friday, helped by some positive consumer confidence data in the US and Germany, but gains were limited as the focus continues to be on the Eurozone and the future of Greece within the single-currency region.
Helping the mood late on was the final reading of the University of Michigan-Thomson Reuters US consumer sentiment index which was revised higher despite expectations for an unchanged reading. Meanwhile, in Germany, the GfK said that its forward-looking consumer confidence index held steady in June with the consultancy adding that "despite recessionary tendencies in Europe and rising uncertainty from the debt crisis, people see the economy growing.”
Stocks fell over the lunchtime period as reports emerged of the latest polls in Greece, showing Syriza (the party against the austerity package tied to Greece's bailout) leading with 30% while New Democracy was following close behind with 26%. Pasok has also edged forward to 15.5%, while most of the other parties have registered a fall in their popularity.
Peter Bofinger, economist of a member of the group which advises the German government, has said that the terms of Greek bailout should be renegotiated as “they were made under the assumption of a much better cyclical development”. He said that this is “very important for both sides, because if you have an uncontrolled exit of Greece, it could lead to a 'Lehman moment' for Europe and that is something that should be avoided at any price."
In other news, Italy's Prime Minister Mario Monti has claimed that "Europe could soon see eurobonds". German Chancellor Angela Merkel continues to oppose the measure as it insists that countries must first become fiscally responsible. Monti says that Germany would eventually change its mind.
Meanwhile, speculation over bank bailouts in Spain continued to weigh on sentiment today as Bankia pushed back the presentation of its restructuring scheduled for this afternoon until Saturday morning; there are rumours pointing to the bank needing more than €15bn in public funds.
Insurance group Aviva was in demand after Exane BNP Paribas upgraded the stock from underperform to outperform. Analysts at the French bank said that Aviva had “significantly underperformed the insurance sector over the last three months and market expectations are limited."
Temporary power solutions provider Aggreko was also performing well after HSBC upgraded its rating on the stock from neutral to overweight.
United Utilities was extending gains made yesterday when it said that it has seen a marked improvement in customer satisfaction in the last year or so, and it is on track to meet regulatory out-performance targets. Nomura this morning upped its target price on the stock from 695p to 715p.
Tullow Oil saw shares rise in late afternoon trade after letting slip at an investor meeting that its Ngamia-1 well in Kenya drilling into the primary target and that initial results showed that it had intersected further oil bearing sands. It released a statement shortly after.
Heading the other way were financial and mining stocks as concerns over the Eurozone fuelled risk aversion. Banking peers Lloyds, RBS and Barclays suffered heavy losses, joined by resource stocks Vedanta, Evraz, Xstrata, Fresnillo and ENRC. ENRC was further weighed but Nomura which cut its target price on the stock from 700p to 650p and reiterated its reduce rating.
Cape, the energy and mineral resources services provider, plummeted after it revealed that its full-year profits will be held back by a £14m one-off charge related to its GL3-Z LNG (liquified natural gas) Project in Arzew, Algeria. Revenue guidance is unchanged.
Coal miner Bumi was also lower after Nomura cut its target price on the stock, citing lower assumed coal prices.
Construction and maintenance firm Interserve was wanted after announcing two contracts in the north of England, worth a combined £200m.
FTSE 100 - Risers
Admiral Group (ADM) 1,116.00p +2.95%
Aggreko (AGK) 2,157.00p +2.37%
Tullow Oil (TLW) 1,395.00p +2.35%
United Utilities Group (UU.) 649.00p +1.88%
National Grid (NG.) 684.50p +1.86%
Hargreaves Lansdown (HL.) 474.10p +1.72%
Petrofac Ltd. (PFC) 1,577.00p +1.61%
Reckitt Benckiser Group (RB.) 3,433.00p +1.57%
SSE (SSE) 1,359.00p +1.42%
Marks & Spencer Group (MKS) 347.80p +1.34%
FTSE 100 - Fallers
Lloyds Banking Group (LLOY) 25.80p -4.12%
Vedanta Resources (VED) 966.50p -3.30%
Evraz (EVR) 299.30p -3.05%
Royal Bank of Scotland Group (RBS) 20.87p -2.66%
Xstrata (XTA) 912.60p -2.40%
Eurasian Natural Resources Corp. (ENRC) 450.30p -2.24%
Fresnillo (FRES) 1,317.00p -2.23%
International Consolidated Airlines Group SA (CDI) (IAG) 140.90p -2.15%
Barclays (BARC) 181.70p -1.94%
IMI (IMI) 880.00p -1.57%
FTSE 250 - Risers
Hiscox Ltd. (HSX) 389.60p +3.07%
BBA Aviation (BBA) 199.00p +2.68%
Home Retail Group (HOME) 77.15p +2.32%
Essar Energy (ESSR) 114.60p +2.23%
JPMorgan Asian Inv Trust (JAI) 175.00p +1.86%
Interserve (IRV) 282.60p +1.80%
Beazley (BEZ) 137.30p +1.70%
Telecity Group (TCY) 777.00p +1.44%
African Barrick Gold (ABG) 337.80p +1.44%
Intermediate Capital Group (ICP) 257.20p +1.42%
FTSE 250 - Fallers
Cape (CIU) 205.00p -36.63%
Bumi (BUMI) 360.30p -9.68%
Centamin (DI) (CEY) 61.00p -7.01%
Aquarius Platinum Ltd. (AQP) 68.05p -5.75%
Petra Diamonds Ltd.(DI) (PDL) 128.30p -5.03%
Cable & Wireless Communications (CWC) 31.50p -4.57%
Ruspetro (RPO) 148.60p -4.44%
Bellway (BWY) 660.00p -4.14%
Imagination Technologies Group (IMG) 490.20p -3.98%
SDL (SDL) 651.50p -3.62%
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