Banks lift FTSE

Hopes of a stake sale in RBS boosted banks and helped to nudge Britain's top share index higher.

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Hopes of a stake sale in RBS boosted banks and helped to nudge Britain's top share index higher on Tuesday, with gains by miners lending support as investors' risk appetite was encouraged by talk of more monetary easing in the United States.

At 12:38 SA time, the FTSE 100 index was ahead 3.65 points, or 0.1 percent, at 5,905.35, having stalled in a push back up towards its 2012 peak of 5,989.

Royal Bank of Scotland was the top FTSE 100 gainer, up 4.4 percent, after people familiar with the matter said Britain had held talks to sell part of its stake in the bank to Abu Dhabi investors.

Abu Dhabi, one of the oil-rich states of the United Arab Emirates, could be attracted to a deal after making billions of pounds on a bet on rival British bank Barclays during the financial crisis.

“A reduction in state ownership of RBS is likely to be positive for sentiment, in our view, as it reflects a potential reduction in political risk, but without further details on potential price, terms and timing, it is difficult to have a definitive view,” Shore Capital analyst Gary Greenwood said in a note.

Barclays was higher in sympathy, ahead 2.1 percent.

Mining stocks also stood out, tracking a firmer copper price, which jumped 2 percent higher on Monday after US Federal Reserve Chairman Ben Bernanke pledged to keep an accommodative monetary policy, boosting demand expectations for risk assets such as commodities and equities.

Kazakhmys was a strong gainer, up 2.9 percent after its full-year results delivered a “decent beat” versus analyst estimates, according to Numis Securities.

WALL STREET AWAITED

US stock futures pointed to further gains on Wall Street, following a surge in the previous session, after Bernanke signaled a supportive monetary policy would remain even though the job picture has begun to improve.

Investors will look to the S&P/Case-Shiller Home Price Index for January, due at 15:00 SA time, and Conference Board March consumer confidence data, at 16:00 SA time, to provide fresh clues as to the state of the US economy.

“Once again we are through the looking glass, in a world where stocks rise on hopes that US economic data will weaken, since this then raises the probability that the Fed will launch QE3 (a third round of quantitative monetary policy easing),” said Ben Critchley, Sales Trader at IG Index.

“We remain stuck in a world where markets seem unable to cope without the possibility of monetary stimulus, underscoring the fact that the global economy still has some way to go before it is successfully weaned off active central bank intervention.”

Integrated oils were the biggest drag on blue chip sentiment, having reversed early gains as profit takers moved in following strong gains in the previous session.

Insurer Resolution was the biggest blue chip faller, shedding 3.2 percent, after it shelved a promised 250 million pound handout to shareholders because falling bond and stock prices had dented its finances.

Also on the downside, Compass Group, the world's biggest caterer, fell 2.5 percent after saying challenging economic conditions in Britain and parts of Europe would lead to slowing organic sales growth in the first half compared with the same period the year before.

And Wolseley eased 0.4 percent as the world's biggest building supplies company said recent growth had slowed on weaker trading in Europe, as it posted a 28 percent rise in first-half profit. - Reuters

Source: http://www.iol.co.za/banks-lift-ftse-1.1264830

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