FTSE LIVE: Xstrata up after board backs Glencore’s bid; UK manufacturing contracts

| October 1, 2012 | 0 Comments

By
This Is Money Reporters

02:42 EST, 1 October 2012


|

10:00 EST, 1 October 2012

15:40

A strong run for banks and miners and a strong US manufacturing survey has helped lift London’s leading shares index by more than one per cent.

The FTSE 100 Index is 97 points higher at 5839 as resources firms were boosted by progress in the Glencore-Xstrata merger while banks were lifted by positive Spanish stress test results released on Friday.

On the other side of the Atlantic, Wall Street’s Dow Jones Industrial Average was 0.8 per cent higher as the Spanish stress test data eased traders’ fears over the eurozone crisis.


Rising shares: Xstrata gave its long-awaited blessing to trader Glencore's bid

Rising shares: Xstrata gave its long-awaited blessing to trader Glencore’s bid

Better-than-expected
US manufacturing data for September also boosted confidence as a
purchasing managers index reading rose to 51.5 from 49.6, signalling a
return to growth.

Spain’s
banks have a capital deficit of 59.3 billion euros (£47 billion),
stress tests conducted by New York-based management consultancy Oliver
Wyman showed, less than the 62 billion euros (£49.5 billion) Wyman
previously estimated lenders would need.


Barclays
saw its shares rise nearly 3 per cent or 5.9p to 220.9p, while Royal
Bank of Scotland was 6p ahead at 262.9p and Lloyds Banking Group
advanced 0.8p to 39.6p.

Gambling
firm Sportingbet saw its shares rise nearly 3 per cent or 1.5p to 53p
after it rejected a £350 million takeover proposal from Britain’s
biggest bookmaker William Hill.

The
online gaming firm said the approach from William Hill, which has
teamed up with European gaming company GVC for the deal, significantly
undervalued the company and its prospects. William Hill shares also rose
1p to 320.1p.

15:25

The FTSE 100 is up 1.49 per cent or 85.97 points to 5,828.04.

Brent crude has risen above $113 a
barrel as better than expected U.S. manufacturing data offset fresh
signs of weakness in China and Japan and evidence of a new recession in
the debt-saddled euro zone.

The
U.S. manufacturing sector expanded in September, shaking off three
months of weakness as new orders and employment picked up, a report
showed today.

12:00

The FTSE 100 climbed 65 points to 5807, as mining stocks led the rally amid revived plans for Glencore’s takeover of Xstrata.

Increasing
optimism that Spain will take the plunge and request a bailout from the
EU to help its ailing economy was also boosting the market, analysts
said, while traders awaited a speech from Federal Reserve chairman Ben
Bernanke for further details on the central bank’s next round of
quantitative easing.

Supermarkets
Sainsbury and Morrison featured on a shortened fallers board after
rival Aldi reported a near six-fold increase in operating profits to
£102.9 million.
Read more here.

At the top of the FTSE 250 Index, shares in Superdry owner SuperGroup jumped 8 per cent, an increase of 45p to 642.5p.

11:25

The FTSE 100 is up 57.16 points or 1.01 per cent at 5,799.23.

Blow to hopes of a rebound in the
manufacturing sector were dashed today, damaging prospects for a return
to economic growth this quarter.

The latest Markit/CIPS purchasing managers’ index (PMI) hit 48.4 for September – below 50, which is the benchmark for growth.

The index is down from 49.6 seen a month earlier, as the crisis in the UK’s largest export market continued to hit orders. Read more here.

The manufacturing sector contracted again in September, according to the Markit/CIPS index

The manufacturing sector contracted again in September, according to the Markit/CIPS index

09:00

The
FTSE 100 Index started the new quarter on the front foot today, helped
by the renewed prospect of a multibillion pound merger in the mining
sector.

The
support of Xstrata’s board for the takeover by Glencore International,
in a deal which will create a new company worth around £56 billion,
ensured the blue-chip miner’s shares rose 14.45p to 971.85p, up 1.5 per
cent.

The
top flight climbed 45.9 points to 5788.1, with mining stocks leading
the rally amid hopes that the Glencore deal will trigger further deals
in the sector. Anglo American set the pace, up 35.75p to 1852.75p, while
Eurasian Natural Resources cheered 4.5p to 313.2p.

Banking
stocks did well as Barclays lifted 6.175p to 221p, Royal Bank of
Scotland climbed 5.2p to 262.2p and fellow part-nationalised bank Lloyds
Banking Group gained 0.7p to 39.6p.

Plumb
Center firm Wolseley topped the FTSE 100 risers board – up 74.5p to
2718p – as investors awaited full-year results from the building
supplies firm later in the week. While the company has suffered from
declining revenues in France, the focus will be on its North American
operations and efforts to revitalise the UK business.

08:00

The FTSE 100 opened fractionally
higher early this morning, led by miner Xstrata after it gave its
long-awaited blessing to trader Glencore’s bid.

Shares
in Xstrata gained 1.6 per cent as its board backed Glencore’s bid after
wrestling for three weeks to reconcile opposing demands from
shareholders over the deal terms.

The FTSE was up 12.82 points, or 0.2 per cent, after falling 0.7 per cent on Friday.

Capping
sentiment was data offering more evidence China, the world’s largest
consumer of commodities, was enduring a seventh straight quarter of
slowing growth on Monday.

PREVIEW:

The FTSE 100 is expected to open 8 to 12 points lower, or down 0.2 per cent this morning, according to financial bookmakers.

The UK blue chip index closed down 0.7 per cent on Friday, or 37.35 points lower, at 5,742.07 points – marking its worst close since ending on 5,657.86 points on September 5.

London copper and Brent crude fell this morning on persistent worries over global economic growth after two indicators showed China’s factory sector is still shrinking, while concerns over Spain’s banks and prospects for a bailout curbed appetite for risk.

The downturn in Britain’s manufacturing sector was expected to have gained momentum in September. The Markit/CIPS manufacturing PMI, due at 0828 GMT, was seen at 49 from 49.5 in August.

On the upside, lending to British consumers was forecast to have grown by £100 million in August after a £220 million drop in July, Bank of England data was expected to show at 0830 GMT.

European stocks are set to open lower today, adding to the previous session’s losses on mounting concerns over Spain’s economic crisis and as data signalled further evidence of slowing growth in China.

At 0634 GMT, futures for Euro STOXX 50, for Germany’s DAX and for France’s CAC were flat to down 0.4 per cent.

Spain’s Treasury Minister Cristobal Montoro said on Saturday the 2012 public deficit would reach 7.4 per cent of gross domestic product, when transfers to aid its struggling banks are included, above the original deficit target of 6.3 per cent of GDP for this year.

An independent report showed on Friday that Spanish banks will need a total of 59.3 billion euros ($76.3 billion) in extra capital to be able to face a serious economic downturn.

Fuelling worries over the pace of global growth, China’s official manufacturing purchasing managers’ index (PMI) showed factory activity contracted for a second month in September and a survey of Japan’s big manufacturers showed sentiment worsening over the past three months.

The closely-watched China survey signalled that the world’s second-biggest economy probably suffered a seventh straight quarter of slowing growth.

SHARES TO WATCH TODAY

XSTRATA : The miner’s independent board members gave their long-awaited blessing for trader Glencore’s revised $33 billion offer on Monday, though only on condition that shareholders also back a plan to retain key managers.

BAE SYSTEMS : Key French EADS shareholder Lagardere said the conditions attached to a planned merger of the European aerospace group with Britain’s BAE Systems were unsatisfactory and called on management to reexamine the project.

BRITISH LAND : The property group said on Monday it has sold the Beehive retail centre in Cambridge for 109 million pounds.

HAMMERSON : The real estate group said on Monday it has sold its office property at 10 Gresham Street, London, for £200 million.

WILLIAM HILL : The betting company is expected to return with a revised offer for online bookmaker Sportingbet which could value the smaller rival at more than £400 million ($645.92 million), The Telegraph wrote today.

ITE GROUP : The company says results for the fourth quarter continue to reflect positive trading conditions and expects revenue for the full year to be around 170 million pounds, in line with market expectations.

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