Financial stocks lifted Britain’s FTSE 100 on Monday to its highest level since the beginning of August, as Italy’s borrowing costs hit a seven-week low amid continued efforts by Mario Monti, Italian prime minister, to overhaul the Italian economy.
The UK index of blue-chip shares advanced 0.33%, or 19 points, to 5,748 and the All Share index improved 0.3%, or nine points, to 2,964. See the FTSE’s performance and the index’s top winners and losers.
Greek talks continue
The yield – or implied interest rate – on benchmark Italian 10-year government bonds dropped seven basis points to 6.19%, its lowest level since 7 December. Spain’s borrowing costs also eased, while the euro strengthened 0.5% versus the dollar to $1.293.
Later in the day, Monti is to present a plan to spur competition and growth to EU leaders in a bid to trim Italy’s its €1.9 trillion (£1.6 trillion) debt burden.
On the back of progresses already made, he will likely be able to 'sit at the negotiations table in a stronger position’, said Paolo Pizzoli, economist at ING. He added that while Monti was likely to call for more ‘solidarity’ across the eurozone, the Dutch bank did not expect ‘quantum leaps’ at this stage.
Meanwhile, Greece was set to continue talks over debt swap with its creditors to prevent a sovereign default in March, when €14.5 billion of three-year bonds will come due for repayment.
But Marc Ostwald, strategist at Monument Securities, warned: ‘The key point is in fact that even if an agreement is reached, this will provide nothing but the briefest respite from concerns about Greek's debt mountain.'
Other stock markets in Europe wavered, even as banks climbed, with France’s Société Générale taking on 7% to €22.5. Germany’s DAX index slid 0.28% to 6,387, France's CAC 40 index edged down 0.02% to 3,321, and the FTSEurofirst 300 index of top European shares was flat at 1,043.
RSM Tenon execs step down
Royal Bank of Scotland (RBS.L) was among the biggest gainers on the FTSE 100, taking on 0.6p to 27.9p. Other financials also advanced: Schroders (SDR.L) and Resolution (RSL.L) added 15p to £14.76 and 3p to 273p respectively.
On the FTSE 250, Dixons Retail (DXNS.L) surged 1.2p, or 8.4%, to 14.7p after Morgan Stanley upped its recommendation for the struggling retailer to ‘overweight’ from ‘underweight’.
Small-cap RSM Tenon Group (TNO.L) slumped 2.3p, or 27%, to 5.9p after the business adviser said it expected to post a loss for the first half and that its top executives were stepping down. Shareholders are likely to see ‘significant’ value lost, and substantial risks remain, warned James Hamilton, analyst at Numis, the group’s house broker.
Thomas Cook (TCG.L) fell 0.75p to 14.4p in the wake of a Financial Times report, which said the travel company had seen UK summer bookings drop by a third in the first half of January.