Bloomberg News

U.K.’s FTSE 100 Little Changed as Next Climbs, BHP Falls

October 04, 2012

The U.K.’s FTSE 100 Index (UKX) closed little changed, after swinging between gains and losses at least 20 times, as central-bank policy makers kept borrowing costs at record lows.

Next Plc (NXT) and Kingfisher Plc (KGF) led retailers higher, advancing more than 1 percent. Tate & Lyle Plc (TATE) climbed 1.9 percent as Credit Suisse Group AG raised its recommendation for the shares. Commodity producers declined.

The FTSE 100 rose 1.97 points, or less than 0.1 percent, to 5,827.78 at the close in London. The measure has climbed 11 percent since its 2012 low on June 1 after the European Central Bank agreed to an unlimited asset-purchase program and the U.S. Federal Reserve announced a third round of quantitative easing to support growth. The FTSE All-Share Index increased 0.1 percent today, while Ireland’s ISEQ Index fell 0.3 percent.

“Europe in particular has reduced the tail risk that was really threatening the investment environment,” Marino Valensise, chief investment officer at Baring Asset Management, said on Bloomberg Television today. “Although it’s very difficult to get excited because the macro situation hasn’t changed all that much.”

Bank of England Governor Mervyn King’s nine-member Monetary Policy Committee today left their key interest rate at a record low of 0.5 percent and maintained their bond-purchase target at 375 billion pounds ($604 billion), as forecast by all economists in a Bloomberg News survey.

BOE Stimulus

By next month’s meeting, they’ll have finished spending the 50 billion-pound round they started in July, forcing a decision on whether more stimulus is needed.

The ECB left interest rates at 0.75 percent and President Mario Draghi said the bank is ready to start buying government bonds as soon as the necessary conditions are fulfilled.

U.S. economic data showed factory orders sank 5.2 percent in August and claims for jobless benefits rose last week.

Retail stocks led gains in the FTSE 100 today. Next rallied 2.7 percent to 3,592 pence, Kingisher climbed 1.6 percent to 268.7 pence and Marks & Spencer Group Plc (MKS) gained 1 percent to 365.5 pence.

Tesco Plc (TSCO) still declined the most in nearly nine months as Natixis downgraded the U.K.’s largest retailer to reduce while Citigroup Inc. reiterated its sell recommendion. The shares dropped 3 percent to 318.15 pence, extending yesterday’s 2.6 percent selloff after the company posted its first drop in profit in almost two decades.

Tate Upgrade

Tate & Lyle climbed 1.9 percent to 687 pence after Credit Suisse upgraded the maker of low-calorie sweetener Splenda to outperform, the equivalent of buy, and raised its price estimate 7.1 percent to 750 pence.

“Certainly it looks to us that the business is in better shape and is being set up to deliver growth,” analyst Charlie Mills at Credit Suisse wrote in a note to clients. “This is not reflected in the share price.”

Carnival Plc, the world’s largest cruise operator, climbed 1.6 percent to 2,350 pence. The company’s U.S.-traded shares rallied in New York yesterday after crude slumped 4.1 percent to a two-month low. Oil for November delivery rebounded as much as 2.5 percent today.

InterContinental Hotels Group Plc (IHG), the world’s largest provider of hotel rooms, gained 1.8 percent to 1,669 pence. U.S. rival Marriott International Inc. yesterday reported earnings that beat estimates after demand for high-end brands increased.

Carillion Plc (CLLN) gained 3 percent to 285.2 pence after the builder said its full-year outlook was in-line with expectations. The company said it will deliver improvements in operating profit and total operating margin.

Commodity companies limited gains on the FTSE 100. BHP Billiton Ltd. (BHP), the world’s largest mining company, fell 1.6 percent to 1,912.5 pence. Xstrata Plc (XTA) lost 2.1 percent to 948.3 pence and Glencore International Plc (GLEN) slid 0.8 percent to 336.5 pence and BP Plc, Europe’s second-largest oil company, retreated 1.1 percent to 434.2 pence.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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