Strong company results power FTSE to 6-month high

Published 10/21/2010, 08:08 AM
Updated 10/21/2010, 08:12 AM

* FTSE 100 up 0.8 percent, shrugs off weak retail data

* Miners push higher as global recovery hopes intact

* Food, travel firms lifted by Europe, U.S. results

By Simon Falush

LONDON, Oct 21 (Reuters) - Stronger miners and banks lifted Britain's top shares to a six month high around midday on Thursday, with confidence on equities bolstered by strong U.S. and European earnings.

By 1142 GMT, the FTSE 100 was 45.43 points, or 0.8 percent, higher at 5,774.36, after rising 0.4 percent on Wednesday. It peaked at 5776.10, its highest level since late April and is up over 10 percent since the start of September.

Miners delivered the biggest lift to the index, supported as metal prices held near recent highs, and as strong corporate earnings and solid data from China supported confidence the global economic recovery was sustainable. Anglo American led the way, up 2.5 percent after releasing third-quarter earnings while Rio Tinto added 1.9 percent.

A broad range of stocks were firmer as solid third quarter results on both sides of the Atlantic lifted confidence that equities would be resilient in the face of economic adversity.

Beverage maker Diageo added 3.5 percent, lifted after French peer Pernod Ricard posted a 10 percent jump in underlying sales in the last quarter, helped by a pick-up in demand in the United States.

"It underscores the idea that you can go to defensive stocks for growth. They are on undemanding ratings, and many are growing their dividends," Andrew Bell, chief executive of investment trust Witan said.

GlaxoSmithKline was one company that announced it was increasing its dividend, though its shares fell 0.5 percent in line with a weaker pharmaceutical sector after it reported its earnings had slipped 1 percent in the third quarter.

BT Group was the top riser, up 4.4 percent after a court ruled that Britain's guarantee to the group's pension obligations extended to employees who joined the firm after its privatisation.

UK equities shrugged off data that showed a British economy struggling to recover strongly from an 18-month recession.

British retail sales unexpectedly fell for a second month in a row in September, driven lower by weak clothing and fuel sales, official data showed.

Lending to UK firms rose in August for the first time since February but remained 5.4 percent lower than the same month a year ago, Bank of England figures showed.

British Airways was also a beneficiary of strong results elsewhere, up 2.9 percent, buoyed by strength from its U.S. peers. Delta Air Lines, US Airways Group Inc and American Airlines parent AMR Corp all posted strong results.

TUI SLIDES

Elsewhere in the travel sector, TUI Travel was the sharpest faller, down 11 percent following a restatement of its 2009 results and the announcement its finance chief would go after the company discovered 117 million pounds ($185 million) owed by customers that will now have to be written off.

But overall there was confidence on the sector, with InterContinental Hotels up 3.4 percent after French peer Accor raised its 2010 profit goal on Wednesday and posted third-quarter sales slightly above forecasts.

Food producer Unilever, household products firm Reckitt Benckiser and Associated British Foods benefited from strong results from French food group Danone, which posted a forecast-beating 15 percent rise in third-quarter sales.

Banks also gained with HSBC and Lloyds Banking Group were up 1.9 and 1.8 percent, respectively.

Tullow Oil was off 3.2 percent after it said an offshore well in Ghana failed to find oil, prompting Oriel to downgrade the British-based explorer to "reduce" from "hold". (Editing by Karen Foster)

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