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FTSE gains on positive Vodafone, Barclays results

Published 11/09/2010, 04:39 AM
Updated 11/09/2010, 04:44 AM

* FTSE 100 gains 0.4 pct

* Vodafone, Barclays up as results please investors

* Marks & Spencer, Intercontinental Hotels slip on results

By Simon Falush

LONDON, Nov 9 (Reuters) - Firm results from mobile phone operator Vodafone and lender Barclays helped lift Britain's top share index early on Tuesday, pushing it back towards a 29-month high on optimism about the corporate outlook. By 0913 GMT the FTSE 100 was 24.25 points, or 0.4 percent, higher after it closed down 0.4 percent on Monday.

The index hit a 29-month closing high on Friday as investors cheered the U.S. Federal Reserve's commitment on Wednesday to extend quantitative easing.

Renewed doubts about peripheral euro zone economies helped douse optimism on Monday. Ireland was the latest cause of concern as borrowing costs there extended a month-long climb on worries about a political impasse ahead of a budget vote.

However the focus on Tuesday returned to the health of the UK corporate sector, with Vodafone adding most points to the blue-chip index after it raised its profit outlook and agreed to sell its interests in Japanese carrier SoftBank for 3.1 billion pounds ($5 billion).

Barclays added 2.9 percent after a sharp improvement in its bad debts that lifted the bank's underlying third-quarter profit and boosted the sector, with the UK banking index up 1 percent.

Elsewhere among financials, Schroders rose 2.7 percent after it outpaced third-quarter market expectations, with sales bolstered by overseas clients.

Miners, sensitive to moves in risk appetite, also provided strong support to the index. Rio Tinto and Antofagasta added 1.9 percent.

While corporate results have been strong, some analysts think further strength will be hard to achieve.

MOMENTUM DOUBTS

"The Q3 earnings season has exceeded expectations but there is uncertainty about whether the momentum can be maintained," Richard Hunter, head of equities at Hargreaves Lansdown, said.

Marks & Spencer slid 3 percent as plans to increase capital spending by 300 million pounds a year for three years unnerved some investors.

Intercontinental Hotels slipped 2.8 percent, the heaviest faller, with investors booking gains after recent strength even though it reported a 5 percent increase in third-quarter revenue.

In terms of domestic economic news, British house prices fell last month at their sharpest pace in a year and a half as a lack of mortgage finance and uncertain economic outlook deterred potential buyers, a survey by the Royal Institution of Chartered Surveyors indicated.

British retail sales picked up in October, driven mainly by higher prices rather than nervous shoppers buying more goods, a survey by the British Retail Consortium showed.

U.S. September wholesale inventories data is scheduled for release at 1500 GMT.

(Additional reporting by Nia Williams; editing by David Hulmes)

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