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Dixons boosted by Comet failure; markets rally

by Chris Marshall on Nov 01, 2012 at 15:55

Dixons boosted by Comet failure; markets rally

Stock markets in the US and Europe were propelled higher by a bevy of heartening US economic reports, with electronics retailer Dixons (DXNS.L) one of the biggest risers in London amid the demise of competitor Comet.

The US manufacturing sector expanded for the second month in a row in October, the ISM survey showed, ending six months of stagnation.

Meanwhile, consumer confidence is on the rise – the Conference Board survey now stands at its highest level since February 2008 – and the ADP employment report exceeded market expectation.

US markets subsequently opened on a high, with the Dow up 1.1% at 13,245. European markets also made a run for it, with London’s FTSE 100 up 1.4% to 5,866. The main test of US economic strength, and potential market mover, comes tomorrow afternoon though when the non-farm payrolls report is published.

Lloyds continued to move higher after this morning’s numbers (see update below), while BG Group slumped to another daily loss, down nearly 4% at 1,101p as sellers maintained the upper hand over opportunistic buyers.

Dixons made strong gains on the FTSE 250, 12.3% higher to 23p after troubled competitor Comet confirmed that it will go into administration.

Seymour Pierce this morning said Dixons would ‘certainly be a beneficiary’ of Comet’s failure. The broker reiterated its ‘buy’ recommendation on the shares, though it added that in the short term Comet’s administrators would sell Comet’s stock off on the cheap.

9:04: Loss-making Lloyds among top FTSE gainers

Lloyds Banking Group (LLOY.L) was among the biggest gainers on a rising FTSE 100 in Thursday morning trade, as even a £144 million quarterly loss and an extra £1 billion of costs for insurance mis-selling were better than City forecasts.

António Horta-Osório, chief executive of the 40% state-owned banking group, said a provision of £2.075 billion relating to payment protection insurance (PPI) – part of wider total costs of £5.3 billion – was the primary driver of the group’s statutory loss of £583 million for the first nine months of 2012.

The group did, however, report progress in cutting costs and strengthening its balance sheet, while maintaining its guidance for investors, helping the shares 3% higher to 41.8p.

Gary Greenwood of Shore Capital said: ‘With its focus on retail and commercial banking and lack of material exposure to investment banking, where there is the greatest regulatory uncertainty, Lloyds remains our preferred play amongst the domestic UK banks.’

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