Banks drive FTSE higher after Barclays results

By Tricia Wright

LONDON (BestGrowthStock) – Banks drove Britain’s top share index higher at midday on Tuesday after Barclays (BARC.L: ) posted 2009 results that beat forecasts, while commodity issues were also in demand, buoyed by firmer metals and oil prices. By 1212 GMT, the FTSE 100 (.FTSE: ) was 31.66 points, or 0.6 percent higher at 5,199.13, after closing up 0.5 percent on Monday.

Barclays was the standout blue-chip riser, up 7.4 percent, after saying it had started the year well when beating expectations with 2009 profit of over 11.6 billion pounds ($18.2 billion) on the back of a strong performance at its investment banking unit.

Solid gains were seen from other British banks, with HSBC (HSBA.L: ), Lloyds Banking Group (LLOY.L: ) and Standard Chartered (STAN.L: ) rising 1.6-4.7 percent.

Royal Bank of Scotland (RBS.L: ) rose 4.6 percent. RBS said it was selling the non-U.S. assets of its RBS Sempra Commodities joint venture to JPMorgan (JPM.N: ) for $1.7 billion.

“The Barclays numbers have played a role in driving UK stocks higher, but generally I think there’s a more friendly tone to the markets at the moment,” said Peter Dixon, economist at Commerzbank.

“Perhaps there is just a feeling out there that the worst is not going to happen and therefore we can start to stabilize a bit, but it is not really a particularly strong move so it could just as easily be turned around if we get more bad news over the coming days — on Greece or indeed other sources,” he said.

Euro zone states urged Greece on Monday to announce more deficit-control steps by mid-March if needed, but said nothing new on last week’s pledge to defend the country if debt market pressures spin out of control.

Mining stocks were in favor, boosted by higher metals prices, with Eurasian Natural Resources (ENRC.L: ), Vedanta Resources (VED.L: ) and Fresnillo (FRES.L: ) among the best off, rising 2.2-3.0 percent.

Anglo American (AAL.L: ) climbed 2.8 percent after selling its Tarmac construction businesses in France, Germany, Poland and the Czech republic to Eurovia, a unit of France’s Vinci (SGEF.PA: ).

BHP Billiton (BLT.L: ) put on 1.8 percent, also helped by an upgrade to ‘buy’ from ING, while Rio Tinto (RIO.L: ) added 1.4 percent, helped by a target price hike from the same broker.

A firmer oil price gave energy stocks a lift. Royal Dutch Shell (RDSa.L: ), BP (BP.L: ) and BG Group (BG.L: ) climbed 0.4-0.9 percent. Broker Bernstein also weighed in with an upgrade to ‘outperform’ for Royal Dutch Shell.

Positive broker sentiment aided drinks firm Diageo (DGE.L: ), up 0.4 percent after a price target hike to 1,070 pence from 985 pence by ING.

DEFENSIVES OUT OF Favor

But weakness was seen elsewhere among defensive stocks, with Imperial Tobacco (IMT.L: ) among the top FTSE 100 fallers, dropping 1.9 percent, knocked by a downgrade in rating to ‘neutral’ from ‘buy’ by Nomura.

Consumer goods group Reckitt Benckiser (RB.L: ) dropped 1.3 percent, while drugmaker AstraZeneca (AZN.L: ) fell 0.3 percent.

InterContinental Hotels (IHG.L: ) was the biggest blue-chip faller, off 3.3 percent after the world’s biggest hotelier said trading will stay tough until business travelers return in greater numbers, as 2009 profit fell 34 percent but still beat forecasts.

British consumer price inflation rose to 3.5 percent year-on-year in January, up from 2.9 percent in December to its highest level since November 2008 and in line with analyst forecasts.

Futures for the Dow Jones industrial average, the S&P 500 and the Nasdaq 100 were up 0.3-0.6 percent.

Investors have the February Empire State index and the latest National Association of Home Builders report this afternoon to give some clues to the health of the U.S. economy.

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(Editing by Dan Lalor)

Banks drive FTSE higher after Barclays results