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Nervy markets manage small gains as oil rises

Nervy markets manage small gains as oil rises

(16:30 update) European stock markets managed to eke out small gains, reversing this morning’s equally minor losses, even after lenders failed to reach a deal over Greece’s next aid package.

Some mixed economic data may have provided the small boost, with a report showing weekly US jobless claims falling after a surge in the week after hurricane Sandy. A separate survey showed that US consumer sentiment rose only marginally in November, up to 82.7 from 82.6 in October, less the forecast by economists.

US markets were flat ahead of the Thanksgiving holiday tomorrow, with the S&P 500 trading at 1,388.

In London, Johnson Matthey remained the biggest loser on the FTSE 100, down 6% to 2,185p (see morning report below).  The FTSE 100 was trading at 5,754.

Major global currencies were also little changed, with the US dollar down only slightly to 80.937, as measured against a basket of other major currencies. The pound traded at 1.5942 against the dollar, little moved after a poorly received report showed the government borrowed £8.6 billion in October.

The price of oil was, however, on the rise again, as international efforts to bring an end to violence in Gaza continue. Brent crude oil futures rose by 0.9% to $110 per barrel.

(10:50) FTSE falters as Greek loan talks break up

The FTSE 100 got off to a hesitant start, ending two days of gains by slipping 12 points to 5,735, after eurozone finance ministers again failed to reach agreement with the International Monetary Fund over the timing of the bailout for Greece.

The IMF is refusing to give Athens an extra two years to reach its debt reduction target while Germany and other European countries are refusing to write off their loans to Greece.

Without agreement the next tranche of money that Greece needs cannot be released. The two sides will meet again in a week’s time.

Meanwhile, Fitch, the only credit ratings agency that still has France on a top AAA rating, said it would review its stance next year. Moody’s cut France to a Aa1 rating this week, following a similar move by Standard & Poor’s in January.

The renewed uncertainty over the eurozone added to the cautious mood following Ben Bernanke’s comments overnight that the Federal Reserve could not cushion the US from the impact of a failure to resolve budget problems that would push the economy over the so-called ‘fiscal cliff’.

In Europe the Euronext 100 shed two points or 0.3% to just over 652.

The dollar rose on currency markets with the pound trading down at $1.5915 while the euro traded lower against both the dollar and sterling at 80.25p and $1.2776 respectively.

The stronger dollar saw gold weaken to $1,726 an ounce.

In London the defensive mood was underlined as utilities advanced, with United Utilities (UU.L) up more than 2% to 673p and Severn Trent (SVT.L) rising 1.5% to £15.70.

Property developers fared well as British Land (BLND.L) rose 1.8% to 523.8p as Morgan Stanley gave it an 'overweight' rating, dragging Land Securities (LAND.L) 1% higher to 785.5p.

Aviva (AV.L) gained a further 2p to 337.2p as investors expressed their approval of the appointment of Mark Wilson, former boss of AIA Group, as the insurer's new chief executive who will take charge of the recovery plan begun by chairman John Macfarlane.

Johnson Matthey (JMAT.L)  led the FTSE 100 lower as shares in the specialist chemicals provider slid £1.30 or 5.6% to £21.94 after its half-year results. Underlying profits for the six months to the end of September fell 6% to £191.2 million. The world’s largest supplier of catalytic converters also warned that the second half would be tougher.

Chief executive Neil Carson said: ‘Whilst precious metal prices have improved from their lows during the summer, largely due to the labour unrest in South Africa, the outlook in some of our other markets has weakened and visibility remains limited.’

Compass (CPG.L) was another big faller, down 17.5p or 2.5% to 691.5p, despite the catering group declaring a 9% rise in full-year profits, a 10% lift in the final dividend and a further round of share buybacks on top of a good performance in the US and emerging markets. Analysts at Panmure reiterated their 'buy' stance and 820p target price saying the stock traded at 14.8 times forecast earnings with a yield of 3.4%.

Qinetiq (QQ.L) slipped a penny to 194.5p after the defence technology company posted a 21% leap in first half profits and said it was confident of hitting its full-year targets despite the cuts in US military spending. 

The Daily Maily and General Trust (DMGOa.L) slipped 3.25p to 469.75p after selling its regional titles for £52.5 million to Local World, a new publishing group led by David Montgomery, former chief executive of the Mirror Group, now Trinity Mirror (TNI.L), up 2.5% to 81.75p. The Daily Mail publisher will take a 39% stake in Local World.

Imagination Technologies (IMG.L), a Citywire Top Stock held by Nigel Thomas' AXA Framlington UK Select Opportunities fund, dropped 15.5p or 3.5% to 425p as its $60 million (£38 million) bid for MIPS Technologies in the US was trumped by a $75 million (£47 million) offer from CEVA, an Israeli rival chip designer. Analysts say clinching MIPS is an important defensive move for Imagination, giving it patents that could strengthen it against competition from ARM (ARM.L), 8p higher at 735p, and make it less reliant on business from Apple, one of its biggest shareholders.

'Imagination is monitoring the situation and will provide a further update in due course,' the company said in a statement.

Halfords (HFD.L) shed 13 points, or nearly 4%, to 332p after the struggling bikes-to-car-parts group revealed a 23% dive in first half profits. With new chief executive Matt Davies at the helm it said it was still looking to make full-year profits of between £66 million and £70 million.

Darty (DRTY.L), the French electrical retailer formerly known as Kesa, advanced 4.5p or 10% to 48.5p after it announced plans to sell its loss-making Italian business.

Among smaller companies French Connection (FCCN.L) slipped 1.75p as the struggling fashion chain revealed flat revenues for the third quarter.

Beowfulf Mining (BEM.L) added 0.7p to 10.7p, valuing the company at £22.5 million, after the Swedish government authorised it to start drilling at its Kallak iron ore mine.

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Nigel Thomas
Nigel Thomas
124/151 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 13.96%
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