Date: Monday 11 Jun 2012
- Spain asks for 100bn euros in aid
- Chinese trade data beats expectations
- Increased risk benefits banks and miners
The weekend's bailout deal for Spain fuelled a surge in London's blue chips on Monday morning, as concerns over the country's troubled financial sector eased.
Spain, the fourth EU country to request a bailout, made a formal petition to the Eurogroup on Saturday for up to €100bn in aid to help recapitalise its banks. The news saw the euro strengthen against the dollar this morning, up 0.7% at $1.2601 by 08:30 in London. Equity markets across Europe rocketed higher with Madrid's Ibex 35 index jumping just short of 5% in the opening hour.
"While the bail-out alleviates short-term funding stress because the loans are passed through the government books, the unintended consequence is that the country’s debt-to-GDP will increase significantly. This follows the recent admission of an understatement of provincial government debt," said analysts at US broker Jefferies.
Helping sentiment early on was some economic data from China over the weekend. Both exports and imports outpaced forecasts in May, while industrial output increased by 9.6%, broadly in line with expectations. Fixed-asset investment however, increased by just 20% in the year-to-date, the smallest gains since 2001.
British banks surged in early on trading, in line with their wider European counterparts, after Spain requested aid for its lenders. Lloyds, Barclays and Royal Bank of Scotland were among the best performers in London.
Dollar-denominated commodity prices surged this morning on the back of the Spanish bailout and Chinese data, spurring strong rises for Vedanta Resources, Evraz, ENRC and Kazakhmys. Glencore was higher after completing the purchase of an 80.08% stake in Namibian zinc miner Rosh Pinah Zinc Corporation.
Engineer GKN was a high riser after its Aerospace division was awarded a contract by US aircraft maker Boeing at the weekend to supply complex machined titanium and aluminium parts and assemblies for the horizontal stabiliser of the 787-9 Dreamliner.
Supermarket giant Tesco edged higher after saying that UK sales including VAT and petrol grew by 2.1% in the 13 weeks to May 26th. Like-for-like sales (excluding VAT and petrol) however fell by 1.5%.
Serco Group, the international services company, was in demand after increasing its public sector exposure with the purchase of Vertex Public Sector Ltd for £55.5m.
Talvivaara Mining and Bumi were among the best performers on the second-tier index early on, in line with the wider mining sector. Even Aquarius Platinum shareholders didn't seem too disappointed that the country's operations with its Marikana Pooling and Sharing Agreement are being put on hold as a result of the ongoing low PGM (platinum group metals) basket price.
Construction group Galliford Try fell despite saying it was part of a joint venture that had won a £180m waste water contract.
FTSE 100 - Risers
Lloyds Banking Group (LLOY) 29.86p +6.60%
Vedanta Resources (VED) 992.50p +6.09%
Royal Bank of Scotland Group (RBS) 233.80p +4.84%
Barclays (BARC) 199.40p +4.75%
GKN (GKN) 189.90p +4.46%
Eurasian Natural Resources Corp. (ENRC) 442.50p +4.41%
Aviva (AV.) 283.00p +4.24%
CRH (CRH) 1,160.00p +4.22%
Kazakhmys (KAZ) 734.50p +4.18%
Evraz (EVR) 290.40p +4.01%
FTSE 100 - Fallers
United Utilities Group (UU.) 677.00p -0.51%
National Grid (NG.) 661.50p -0.08%
FTSE 250 - Risers
Lamprell (LAM) 93.95p +11.18%
Talvivaara Mining Company (TALV) 159.90p +6.32%
Bumi (BUMI) 384.60p +5.37%
Ocado Group (OCDO) 99.60p +4.95%
Salamander Energy (SMDR) 179.90p +4.71%
UBM (UBM) 575.50p +4.45%
Cape (CIU) 279.00p +3.87%
Anglo Pacific Group (APF) 248.00p +3.85%
Ferrexpo (FXPO) 209.80p +3.66%
Wood Group (John) (WG.) 707.50p +3.59%
FTSE 250 - Fallers
Ruspetro (RPO) 152.20p -1.81%
Domino Printing Sciences (DNO) 559.50p -0.97%
Genesis Emerging Markets Fund Ltd. (GSS) 460.60p -0.92%
KCOM Group (KCOM) 69.45p -0.79%
Galliford Try (GFRD) 597.50p -0.67%
F&C Commercial Property Trust Ltd. (FCPT) 101.40p -0.59%
Carpetright (CPR) 681.00p -0.58%
Big Yellow Group (BYG) 283.30p -0.56%
Hansteen Holdings (HSTN) 73.75p -0.41%
Savills (SVS) 324.80p -0.40%
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