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Results and miners drive FTSE to 29-month peak

Published 11/09/2010, 06:57 AM
Updated 11/09/2010, 07:00 AM
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* FTSE 100 gains 0.8, hits high since June 2008

* Vodafone, Barclays up as results please investors

* Miners firm as copper nears all-time peak

By Simon Falush

LONDON, Nov 9 (Reuters) - Firm results from mobile operator Vodafone and lender Barclays combined with strength among mining stocks on Tuesday to lift Britain's top share index to a 29-month high. By 1118 GMT the FTSE 100 was up 44.27 points, or 0.8 percent, at 5,894.23, after closing down 0.4 percent on Monday. The index touched its highest since June 2008, is up 9 percent this year and has jumped 23 percent since hitting a year's low on July 1.

The index rose to 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 2.5 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.

"It's all down to wonderful results and nothing else," David Buik, senior partner at BGC Partners, said.

"We have got out of the market place where we were anaesthetised by QE last week, paused for thought yesterday while we looked for somewhere to hang our hat and now Vodafone and Barclays have come through."

Elsewhere among financials, Schroders rose 3.8 percent after it outpaced third-quarter market expectations, with sales bolstered by overseas clients.

MINERS GAIN

Miners also provided strong support to the index as gold hit a record high and copper hit a 27-month peak. Rio Tinto and Antofagasta added 1.9 percent.

Randgold Resources was the standout gainer, up 4.4 percent after it said third-quarter profits more than doubled to $28.2 million.

Energy firms also added to strength for the index as crude futures hit a two-year high after the International Energy Agency said oil may exceed $100 per barrel by 2015. BP added 2.9 percent.

Technical indicators pointed to further strength, analysts said.

"Currently the index seems to be en route for the next key level of 6,050 - 6,117," Sandy Jadeja, chief technical analyst at City Index, said.

"As long as short-term support (at) 5,748 is not violated, the week ahead should remain positive with minor pullbacks taking place along the way."

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

"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.

And data also pointed to tough times ahead for those companies with big exposure to the UK economy. British manufacturing growth slowed to its weakest pace in five months in September, reinforcing fears of an economic slowdown.

British house prices fell at the sharpest pace in a year and a half as a lack of mortgage finance and uncertain economic outlook deterred buyers, a survey indicated.

Intercontinental Hotels slipped 5.2 percent, the heaviest FTSE 100 faller, with investors booking gains after recent strength even though it reported a 5 percent increase in third-quarter revenue. (Additional reporting by Nia Williams; Editing by David Holmes)

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