Financials and telecoms help fuel late rally
Strong retail sales data in the US bolstered spirits on both sides of the Atlantic ahead of tonight’s key interest rate decision.
And in thin trading in the City, banks and telecom stocks were among the heavyweight blue-chips helping to fuel the late rally.
By the end of the day the Footsie was up 50.1 points at 4271.7 after falling 59.1 points by the time trading began in New York. The US figures showed retail sales rose by 1.2% in July, reassuring traders worried that American consumers may be tightening their belts.
Economists said the data indicated that the Federal Reserve would decide against an interest rate cut. Technical buying was also helping a number of Footsie stocks due to go “ex-dividend” today.
Investors made the most of their last chance to bag dividend payouts promised in recent results with aerospace group GKN rising 7p to 278p.
Others to benefit included electrical retailer Dixons up 4p to 162p, and oil giants BP and Shell, up 12p and 8p at 515p and 442p respectively.
Banks were also on the up, with Royal Bank of Scotland climbing 25p to £15.55, HBOS up 22p to 738p and Standard Chartered ahead 25p to 78p.
Of the telecoms recovering earlier losses, Vodafone closed up 1p at 95p, rival mmO2 rose 1p to 43p and BT moved up 4p to 195p.
The overall mood in the City was subdued ahead of last night’s much anticipated interest rate decision in the US.
Most of today’s corporate news was restricted to smaller stocks with waste disposal group Waste Recycling tumbling 18% after poor interim results.
The group saw its profits cut in half and warned margins would be hit by a wave of new legislation. Shares tumbled 60p to 272p.
Nuclear generator British Energy saw its market value tumble by 30%, 26p to 63p, after reporting problems at its Torness power station in East Lothian.
The group took Reactor 1 at the nuclear power station out of service yesterday to investigate vibrations on one of the gas circulators.
The move means both reactors at British Energy’s Torness plant are now shut and analysts said it was likely to impact on profits and the dividend.
Elsewhere sports consultancy firm Sports Resources suffered a 39% slump, down 5p to 8p, after issuing its second profits warning this year.
And discount fashion retailer Matalan fell 1p to 235p. It revealed finance director Ian Smith would be stepping down after 11 years in February.
The biggest risers were Kingfisher, up 7p at 199p, mmO2, up 1p at 43p, Standard Chartered, up 25p at 728p and Bradford & Bingley, ahead 11p at 340p.
The heaviest fallers were Granada, down 3p at 82p, Canary Wharf, off 12p at 383p, Royal & Sun Alliance, down 3p at 100p, Cable & Wireless, down 3p at 152p.
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