5600 barrier firmly in FTSE sights

The London market had the 5600 threshold firmly in its sights tonight after hopes of an early cut in interest rates ensured a fourth positive session in a row.

The London market had the 5600 threshold firmly in its sights tonight after hopes of an early cut in interest rates ensured a fourth positive session in a row.

Investors switched their money into stocks after a surprise split on the Bank of England’s monetary policy committee over whether to hold rates at 4.5% this month.

The 8-1 decision by the MPC sparked speculation that a rate cut could come as soon as February, contributing to the FTSE 100 Index closing 39.5 points higher at 5587.4.

Sentiment was also boosted by gains of more than 80 points on Wall Street even though data for economic growth in the United States was revised down.

Shares in aerospace firm BAE Systems took off after securing a deal that will see its Eurofighter jets replace the Tornado for the Saudi Arabian air force.

BAE Systems added 6% or 22.25p to 370p and was joined on the way up by top-flight newcomer Kazakhmys.

Kazakhmys rose 5% or 35.5p to 719.5p to hit its highest level since floating on the stock market two months ago, while rival miners Rio Tinto and Xstrata ticked 57p and 26p higher to 2621p and 1372p respectively.

Oil heavyweights BP and Royal Dutch Shell also featured among the session’s biggest risers, as the price of a barrel of crude oil moved slightly above $58. BP cheered 5p to 625p and Shell added 21p to 1850p.

But stocks going ex-dividend featured heavily on the fallers board, with United Utilities declining 8.5p to 677p after shareholders lost the right to the most recent payout. This issue also led to Man Group falling 25p to 1928p and ITV weakening 0.75p to 111.5p.

Elsewhere, plastic bag maker British Polythene Industries jumped 14% or 63p to 512p after overcoming high energy costs to predict results “materially” in excess of market expectations.

Computer games maker SCi Entertainment rose 4% or 24p to 615p as investors speculated that takeover talks with an interested party may result in a formal offer at a premium to the current price.

Another rumoured bid target, Dairy Crest, rose 19.5p to 536p even though it has already confirmed this week that it is not in takeover talks.

Shares in motor dealer Reg Vardy firmed 11p to 835p after a bid battle between suitors Pendragon and Lookers remained a distinct possibility.

Lookers – up 8.25p to 452.5p – released a statement saying that it was making progress in evaluating whether to table a cash offer and expected to update the market again early next year.

And outdoor advertising firm Maiden was back in favour after receiving a number of bid approaches – just 24 hours after a revealing that a string of setbacks had put it in breach of its banking covenants. Shares in the company bounced 20% or 15.5p to 91.5p.

The biggest blue chip risers were BAE Systems up 22.25p to 370p, Kazakhmys ahead 35.5p to 719.5p, Reuters up 12p at 420.5p and Hanson ahead by 15.5p to 632p.

The heaviest fallers were Compass Group down 3.5p to 216.25p, Amvescap off 5.75p to 441p, Gallaher down 11.5p to 882.5p and Man Group off 25p to 1928p.

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