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Market overview: FTSE closes up 12 at 5,479

Date: Friday 15 Jun 2012

1630: Today the UK government and the Bank of England announced multi-billion pound plans to get banks lending more to companies. The move comes as the UK economy has stalled, with recent indicators pointing to the country remaining in recession for a third quarter. Chancellor George Osborne said the plan, which reports have valued at between £80bn - £140bn, showed the UK was "not powerless in the face of the Eurozone debt storm". The news sent UK banks soaring, with Lloyds, RBS and Barclays all making strong gains. However, economists said poor UK trade and construction figures out on Friday would dampen any positive mood left over after the government unveiled its plans. The UK's overall trade deficit widened from £3bn to £4.4bn in April, with the goods deficit widening from £8.7bn to £10.1bn, the largest in seven months. The FTSE closed up 12 points at 5,479.


1310: Engineering group Weir has not been seeing much love from the market since it abandoned its bid for Australian mining equipment firm Ludowici back in March, but with the shares around eight quid lower than they were towards the end of March, Citigroup reckons the selling is about to stop. The broker has upgraded Wier to a neutral rating and upped its target price to 1454p from 1400p previously. Meanwhile, finnCap has downgraded Albemarle and Bond to 'hold' after the pawnbroker issued a profit warning on the backing of slowing growth in sales of gold. FTSE 100 is up 24 at 5,491.

1112: Economists at Barclays have just announced a change in their interest rate forecast for the Bank of England. "We are changing our UK monetary policy forecast, and now expect the MPC to approve a further 50bn pounds of quantitative easing (QE) at the July meeting. We had previously forecast no further QE. We expect the asset purchases again to be exclusively of gilts. The primary reason for our change of view is the deepening of the euro crisis, following the renewed turbulence in Spain. This is infecting the UK economy through tightening credit conditions and weak levels of household and business confidence," they write. FTSE 100 up 31 to 5,498.

1053: UK trade data has done equities no favours, with the goods deficit widening to its fattest state in seven months. Nevertheless, the top share index is just about keeping its head above 5500, thanks largely to the strength of the banks following the Bank of England's new scheme which it is calling the Extended Collateral Term Repurchase facility, or ECTR. This will give banks access to short-term money to manage 'exceptional market stresses'. Meanwhile, dollar weakness is making commodities cheaper, prompting demand for resource stocks such as Vedanta, Kazakhmys, ENRC and Fresnillo. In the mid-cap space rental equipment firm Ashtead is higher after Canaccord Genuity upgraded the stock to 'buy'. FTSE 100 is up 35 at 5,502.

1008: A slow-down in top line growth in the second quarter is concerning investors in Aggreko, the temporary power and temperature control provider. The share is the worst performing blue-chip in early trading. Accountancy firm Sage is unmoved by news that Chairman Tony Hobson is to step down to be replaced by Donald Brydon, currently Chairman of medical devices maker Smiths Group. FTSE 100 is up 48 at 5,515.

0831: Taking their lead from Wall Street, London's leading stocks have opened higher. US stocks put on a spurt after reports emerged that central banks are prepared for joint action to inject liquidity into the system to ease possible market strains after this Sunday’s elections in Greece. Banks lead the way in London after the UK government and the Bank of England announced multi-billion pound plans to get banks lending more to companies. Royal Bank of Scotland, Lloyds Banking and Barclays occupy the top three spots among Footsie risers. Resource stocks are also wanted but Aggreko powers down after its trading update failed to provide the usual fireworks. FTSE 100 is up 36 at 5,503.


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