Weak US figures spur hopes of Fed action

14.47: Higher-than-expected unemployment claims and weak housing figures have pushed the US market slightly higher on hopes that signs of sluggish economic growth could spur on the Federal Reserve to ease monetary policy.

US unemployment claims inched up to 366,000, slightly ahead of expectations of 365,000 in the past week and housing starts registered at 0.75 million in the past month, slightly behind the 760,000 forecast.

In lacklustre August trading markets moved slightly higher on Wall Street: the Dow Jones Industrial Average added 0.04% to 13,169 and the Nasdaq Composite index took on 0.26% to 3,039.

Balfour Beatty slips on analyst downgrade

12.10: Construction group Balfour Beatty (BALF.L) dropped 8.4p, or 2.8%, to 287p, following a downbeat note from analysts at Deutsche Bank.

Manu Rimpela, analyst at Deutsche Bank, said: ‘The shares have now rerated almost back to the average price-to-earnings ratio of 8.5 since 2008 and with disappointing underlying performance in the first half of 2012, we see limited room for the shares to rerate further in the absence of earnings upgrades. The dividend yield has also fallen to below 5% and we see better value elsewhere in the sector and hence downgrade the stock to hold.’

Rimpela also reduced its target price from 323p to 320p.

Gas company BG Group (BG.L) gave up 18p, or 1.4%, to £13.03, following a downgrade from Morgan Stanley. Analysts lowered their target price to £14.50 from £16.10, and reduced their outlook on the stock to ‘equal weight’ from ‘overweight’. 

Insurer Prudential (PRU.L) shed 14p, or 1.7%, to 809p as analysts at Nomura cut their target price to 680p from 740p and held a ‘reduce’ rating on the stock.  

African Barrick Gold tops FTSE 250 on sales talks

09.10: African Barrick Gold (ABGL.L) soared 44.4p, or 11.3%, to 438p, to the top of the FTSE 250 as parent company, Barrick Gold, confirmed it is in talks to sell its 73.9% stake in the gold producer to China National Gold Corporation.

A company representative said in a statement: ‘Discussions are at an early stage, and there can be no certainty that these discussions will result in the acquisition of all or part of Barrick's holding in African Barrick Gold.’

Barrick also said that if China Gold were to acquire more than 30% of the voting rights it would be obliged to offer a full takeover.

Finnish nickel miner Talvivaara (TALV.L) shed 6.7p, or 4.8%, to 133.6p after it cut its nickel output forecast for 2012.

Weak commodity prices hit profits, and the group reported an operating loss of €10.9 million (£8.5 million) to the end of June, up from a loss of €1.2 million (£0.9 million) in the first half of last year.  

FTSE 100 edges higher on hopes for stimulus

08.00: The FTSE 100 has started slightly higher, boosted by comments from China’s premier Wen Jiabao, who said that slowing inflation is giving the Chinese authorities more space to ease monetary policy to boost growth.

According to Chinese state news reports, Wen said: ‘We have the conditions and capabilities, and will be sure to fulfil this year’s economic and social development targets’. He said downward pressure on the economy remained ‘relatively large,’ and there is ‘growing room for monetary policy operation’.

Asian shares were mixed after Wen’s comments. Britain’s FTSE 100, which had closed lower on Wednesday, moved 0.17% higher to 5,842.

Investors will be eyeing a couple of US economic reports later, with weekly jobless claims and the August Philadelphia Fed survey due.

Shares in Barclays, HSBC and Royal Bank of Scotland were little moved after they were named among banks to be questioned in the US over alleged manipulation of the Libor rate.