Morning:
8°c
Stock market investors were doing their best to look on the bright side today after the combined losses from Royal Bank of Scotland and British Airways reached £1.79 billion during the first six months of the year.
Still, the outcome could have been a lot worse they chimed.
BA responded with a rise of 9p at 195½p — making it the best blue chip performer — while Royal Bank of Scotland, which this week was promised a further £33.5 billion of taxpayers' money, put on 0.4p at 35.6p.
Despite the best efforts of City investors, the FTSE 100 index was still left nursing a loss of 0.71 at 5124.93. Dealers said yesterday's strong finish had not been justified and that most fund managers were choosing to keep their powder dry ahead of today's US non-far payrolls.
JPMorgan has some catching up to do in Barclays. It has raised its target from 220p to 280p but continues to rate the shares underweight. That compares with the current share price of 334¼p, down 1¾p, which has dropped back from the 360p level in recent weeks after the sale by the Qatar sovereign wealth fund of £1.3 billion of shares. Qatar was one of several sovereign wealth fund which ploughed money into Barclays enabling it to avoid joining the Government's asset protection scheme.
Citigroup sees a brighter future for Lloyds Banking Group, ½p better at 83½p, now that the Government has given the UK's biggest mortgage lender the go-ahead to raise £21 billion of new capital. It has raised its rating from hold to buy.
Among the miners, S&P Equity Research has raised its recommendation on BHP Billiton, 16½p higher at 1716p, from hold to buy. Citigroup has a buy rating on Chilean copper miner Antofagasta as part of a review of the mid-cap miners. It points out Antofagasta, 19p higher at 858½p, has underperformed its heavier debt laden rivals, such as Kazakhmys, 20p better at 1228p, during the past six months and now expects more modest gains in base metal prices. Antofagasta's low-risk production growth now makes it the best copper option next year. Citigroup goes on to warn that commodity price and earnings momentum in the sector are slowing. “We screen for a combination of lagging performance, valuation, volume growth and potential internal catalysts. However, we maintain our preference for the larger capitalised over the mid-caps”. Its top pick is Rio Tinto, up 23p at 2896p, driven by valuation, growth catalysts and an improving outlook for iron ore and aluminium prices.
Miners generally enjoyed a better day with Vedanta Resources adding 35p at 2277p upon further reflection of yesterday's trading news. Fresnillo also added 10p at 851¼p.
In New York a combination of positive economic news and encouraging corporate developments put the fizz back into shares on Wall Street overnight. Investors warmed to the weekly jobless claims which showed a drop from last week's revised 532,000 to 512,000.
That was far better than most analysts had forecast and bodes well for the outcome of today's non-farm payroll numbers. The number of people in work has also increased productivity.
According to the Labor Department, non-farm productivity surged to an annual rate of 9.5% last month, the fastest growth in six years. The Dow Jones responded with a rise of 203.82 to 10,005.96.
Sentiment was also bolstered by third-quarter profit numbers from Cisco Systems, up almost 2% at $23.72. Dealers said the better-than-expected numbers reflected a broad increase in spending on network products. Research in Motion, which makes the BlackBerry, also put on 1.6% at $58.54.
Shares in Asia were looking to end the working week on a firm note. In Tokyo, leading shares were marked higher as exporters climbed after the good news on US jobs.
Pioneer Corporation advanced almost 9% to 246 yen after UBS upgraded the consumer electronics company from sell to neutral.
Pioneer president Susumu Kotani said the amount of fundraising planned by the company for the financial year ending in March will be reduced by around half from an original 40 billion yen ($440 million) target. NEC Corporation surged despite saying it plans to raise up to $1.5 billion in shares.
The Nikkei 225 closed 71.91 points higher at 9789.35, although it was down for the second week in a row.
