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FTSE ends 0.9 pct higher on miners, banks, oils

Published 07/14/2009, 12:32 PM
Updated 07/14/2009, 12:48 PM
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* Miners in demand; metals prices rally

* Banks higher on Goldman Sachs results

* Vodafone and food retailers weigh

By David Brett

LONDON, July 14 (Reuters) - London's top share index closed up 0.9 percent on Tuesday, led by miners, banks and oil producers as impressive corporate data from the United States outweighed mixed economic figures.

The FTSE 100 index ended 35.55 points higher at 4,237.68, extending Monday's 1.8 percent gains. The index has risen more than 23 percent since hitting a six-year low in March, but is still down 4.4 percent for the year.

Impressive figures from Goldman Sachs, Wall Street's largest surviving bank, and Johnson & Johnson offset an unexpected jump in producer prices in the U.S., which came in at more than double economists estimates.

"Given the recent weakness in markets we have seen, the second-quarter results season should trigger a little bit of a mini rally. If we don't rally, then we could see the FTSE in sub-4,000 territory," said Paul Kavanagh, a partner at Killik & Co.

Chip manufacturer Intel will release its figures later on Tuesday in the U.S.

Banks gained positive momentum after Goldman Sachs said its quarterly earnings surged 33 percent on strong trading results.

Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland put on between 1.2 and 2.1 percent.

Miners were the top sector gainers as investor optimism of even higher metals prices drove stocks north.

Fresnillo, Lonmin, Kazakhmys, Antofagasta, Xstrata and Rio Tinto added between 5.1 and 13.3 percent.

Insurers were also strong. Aviva, Friends Provident, Old Mutual and Prudential rose between 0.9 and 3.5 percent.

Energy stocks pushed higher, as crude stayed above $60 a barrel. Cairn Energy, BP, BG Group and Tullow Oil climbed 0.4 to 4.9 percent.

MIXED MESSAGES

Kavanagh said the focus will be on corporate earnings given the mixed picture of the wider economic outlook.

The British Retail Consortium said retail sales rose in June and house prices in England and Wales fell at their slowest annual pace in almost two years last month.

However, ministers in Britain took a more cautious tone.

UK finance minister Alistair Darling said there was still a lot of uncertainty, while business secretary Peter Mandelson said the fall in the economy was coming to an end but the "severity, obviously is not yet behind us".

VODAFONE WEIGHS

Vodafone was the biggest single drag on the blue chips, down 1.9 percent, after a downgrade from UBS to "neutral" from "buy" and a cut in the price target chilled appetite for the telecoms giant.

UBS said in a note that economic pressures, market share loss and currency effects have combined to put pressure on earnings estimates at the telecoms operator, and that earnings will decline 11 percent this year.

Food retailers were also hit. Tesco, Wm Morrison Supermarkets and J.Sainsbury fell 0.3 to 0.9 percent.

"Sentiment clearly remains key and at least for the time being the bulls do seem to be pushing in," said David Fineberg, head of trading at CMC Markets.

There will be more data on Wednesday for the UK market to digest. UK unemployment data will be followed by jobless figures from the euro zone and later the U.S. CPI will keep the economic fundamentals on the agenda. (Editing by Karen Foster)

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