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FTSE rallies; Smith & Nephew gains
Markets rally ahead of a European Central Bank meeting on interest rates as Smith & Nephew posts strong first-quarter results.
Britain’s FTSE 100 rebounded on Thursday morning following Wednesday’s sell-off, and shares in Smith & Nephew (SN.L) gained after the medical group posted encouraging first-quarter results.
The benchmark UK index of blue-chip shares took on 0.6%, or 34 points, to 5,792 and the Mid-250 index gained 0.18%, or 20 points, to 11,496.
Smith & Nephew, which makes a range of medical devices, took on 16.5p, or 2.7%, to 622p as trading profits rose 5% in the first quarter of 2012. See the FTSE’s performance and the index’s top risers and fallers.
The company, which features in Derek Stuart’s portfolio in Citywire Top Stocks, has also seen revenues rise 3% to £667 million in the same period, boosted by sales in its wound-care and knee-replacement divisions.
Spanish bonds under scrutiny
Asian markets gave a lacklustre performance as an index of Chinese services slipped in April to 56.1 from 58 in the previous month.
An auction of three- and five-year bonds in Spain will be closely watched. The sale will be the first since the country was downgraded two notches from A to BBB+ by ratings agency Standard & Poor’s and the country officially entered recession.
Ten-year Spanish bond yields remain high and opened at 5.88%, creeping back to 5.87% ahead of the auction.
However, European markets ticked up to reclaim lost ground ahead of a meeting of the European Central Bank (ECB) on whether to raise the region’s interest rate, which is expected to be held at 1% for the fifth consecutive month.
Other stock markets in Europe also made gains: Germany’s DAX index jumped up 1.04% to 6,781, France's CAC 40 index added 1.09% to 3,262, and the FTSEurofirst 300 index of top European shares inched ahead 0.72% to 1,051.
Michael Hewson, senior market analyst at CMC Markets, said: ‘Comments made last week by Mario Draghi, the ECB chief, about some form of "growth compact" has prompted speculation, probably misplaced, that the ECB might give some clues about plans for another LTRO or some other form of help for a very sickly European economy.
‘It is more likely that Draghi will revise downwards the ECB’s growth forecasts, as well as give more details about any trickle-down effect from the recent LTROs.’
Comet owner Kesa rises on French deal
Retailer Kesa Electricals (KESA.L) took on 4p, or 7.1%, to 60p as its French retail chain, Darty, expanded its partnership with mobile provider Bouygues Telecom. Analysts at Singer raised their view on the stock from ‘sell’ to ‘fair value’ following the announcement.
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