Fund management company Schroders and miners ENRC and Vedanta proved bright spots in slow Monday morning trade, boosted by analyst upgrades, while the FTSE 100 struggled to hang onto 6,120.
Investors, who have started 2013 in bullish fashion, were waiting on major earnings releases from US banks later in the week, followed by a health check for the Chinese economy when GDP and industry numbers are published on Friday.
This morning there was a boost to sentiment from US Federal Reserve official Charles Evans, who said the US economy is expected to grow by 2.5% in 2013, improving to 3.5% growth in 2014. He said that unless inflation becomes a major concern, the central bank would continue with its stimulus to boost growth.
Most Asian markets were higher, with China’s Shanghai Composite rallying strongly, up 3%, after officials announced there would be another increase in the allowances for foreign investors to buy securities, according to news reports.
European markets though weren’t so exuberant, with the Eurofirst 300 and French and German benchmark indices marginally higher. The euro rose by 0.09% to $1.3351.
Analysts lift London shares
Schroders (SDRt.L) was among the biggest gainers on a flat FTSE 100, up 1.5% to 1,473p after JPMorgan raised its target price on the asset manager to 2,556p from 1,882p.
Miners also made gains, with ENRC (ENRC.L), Petrofac (PFC.L) and Vedanta (VED.L) all up nearly 2% at 328p, 1,708p and 1,231p respectively. Credit Suisse upgraded its outlook on ENRC from neutral to ‘outperform’, bumping up its target price to 400p from 350p. ‘Our cautious stance in H212 was due to concerns over earnings, balance sheet and M&A,’ the analysts noted. ‘We think downside risks are now limited with potential re-rating catalysts in 2013. Importantly, the company‘s acquisition run has finally ended and could kick into reverse with small divestments in ‘13/14 in our view.’
The bank also initiated Vedanta shares with an 'outperform' rating.
Lloyds Banking Group (LLOY.L) meanwhile rose 1.9% to 55p.
ABF downgraded on valuation worries
Losers on the benchmark index included Primark owner Associated British Foods (ABF.L), down nearly 1% at 1,516p after analysts at Nomura downgraded the shares to ‘neutral’ from ‘buy’, on concerns about valuation after 2012’s strong share returns.
Shares in Man Group (EMG.L) dropped 0.3% to 92p after JPMorgan cut its target price on the hedge fund manager from 63p to 57p, with a ‘neutral’ rating.
Shares in accounting software firm Sage (SGE.L) dropped 1.7% to 308p after being downgraded by Barclays from 'equal weight' to 'underweight'.