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FTSE breaks back through 5,200 as oil majors gain

Published 10/12/2009, 04:45 AM
Updated 10/12/2009, 04:48 AM
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* Hits 12-month high at 5,216 points

* Oil majors lifted by gains in crude price

* This week's U.S. corporate earnings eyed

By Harpreet Bhal

LONDON, Oct 12 (Reuters) - Britain's top shares rose 1.0 percent early on Monday, regaining 5,200 points for the first time in over a year on advances in oil majors and a rally by Vodafone, with investors awaiting the next batch of U.S. earnings.

By 0925 GMT the benchmark FTSE 100 was up 51.29 points at 5,213.16, a fresh high for 2009 and trading back above the 5,200 level for the first time since mid-September 2008.

The blue chip index ended just 7.23 points higher on Friday as it moved in a narrow 40-point trading range.

Energy issues provided the main lift for the market as crude prices rose over 1 percent to more than $72 a barrel, helping BP , Royal Dutch Shell and Tullow Oil gain 0.7 to 1.1 percent.

BG Group, which rose 0.9 percent, was also helped by a Sunday Times report which said the British gas producer has received an unsolicited bid for most of its 1.5 billion pound power generation business and could announce a sale shortly.

With the third-quarter U.S. corporate earnings season underway, investors will be watching for results from the likes of Intel Corp on Tuesday and JPMorgan Chase on Wednesday for fresh evidence on the health of U.S. companies and the extent of recovery in the economy.

"With Columbus Day today it's going to be quite quiet but we have results this week from U.S. firms and that is where everyone is going to be looking," said Nick Serff, market analyst at City Index.

U.S. equity markets will be open on Monday, while the bond market and government departments close for the Columbus Day federal holiday. Japanese stock markets were closed for a public holiday on Monday.

Heavyweight Vodafone was a top blue chip gainer in London, up 0.9 percent, rallying after a recent sell-off precipitated by worries over a price war in the Indian mobile telecoms market.

Banks were mixed, awaiting the latest results from their U.S. peers, with the overall sector positive thanks to gains in heavyweight HSBC, up 0.6 percent, and Standard Chartered, ahead 0.5 percent.

Lloyds Banking Group shed 1.1 percent on reports the lender has lined up a syndicate of investment banks to underwrite an 11 billion pound rights issue, the Sunday Times reported, with UBS and Bank of America Merrill Lynch to act as lead underwriters.

Barclays was down 0.9 percent after the Financial Times reported the lender is planning to spin off a 4 billion pound portfolio of complex credit assets as it presses ahead with a process to clean up its balance sheet.

Royal Bank of Scotland fell 0.2 percent after sources close to the lender said the bank's advisors, Morgan Stanley and Hoare Govett, have suggested a public listing of car insurer Churchill in a move which could raise billions of pounds, the Independent on Sunday said.

MINERS MIXED

Mining issues were mixed, with slightly firmer metals prices having providing some support overall. Kazakhmys, Lonmin and Xstrata added between 0.2 and 0.4 percent, but Antofagasta, Rio Tinto and Rangold Resources shed 0.3 to 1.6 percent.

China has extended by a month a probe into suspected corporate espionage by Rio Tinto's employees, a defence lawyer said, a case which has strained ties between Australia and its second-largest trade partner.

As a sector, utilities were the only blue chip fallers, led by International Power, down 0.6 percent, and United Utilities down 0.2 percent.

On the economic front, British interest rates are expected to stay at 0.5 percent until 2011 and will not rise to 2 percent until 2014, the Centre for Economics and Business Research (CEBR) said on Monday.

No domestic economic data are due for release on Monday although investors will have key UK inflation and unemployment numbers to digest over the next two sessions.

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