Defensives help FTSE higher; miners, banks weak

By Jon Hopkins

LONDON (BestGrowthStock) – Britain’s leading share index added 0.3 percent on Tuesday, as support for defensive issues, and a modest early rally on Wall Street, offset weakness in heavyweight miners and banks.

At the close, the FTSE 100 index (.FTSE: ) was up 16.54 points at 5,276.85, snapping a four-session losing streak, having earlier reached an intraday low for the year of 5,215.73.

“Many are hoping that this will mark a line in the sand under the recent decline … A couple of days holding steady here could prove to be a sign that the selling is over and it is time to start looking for a run back up to the earlier January highs,” said David Jones, chief market strategist at IG Index.

Pharmaceutical stocks were the best blue-chip performers, wanted for their defensive attractions and helped by solid full-year results from Swiss peer Novartis (NOVN.VX: ), with GlaxoSmithKline (GSK.L: ), AstraZeneca (AZN.L: ) and Shire (SHP.L: ) putting on 1.5 to 1.6 percent.

Other defensive issues were also in favor, with cigarette maker Imperial Tobacco (IMT.L: ) up 2.0 percent, household cleaning goods group Reckitt Benckiser (RB.L: ) adding 1.4 percent and United Utilities (UU.L: ) up 1.1 percent.

Food retailers were wanted too, with J Sainsbury (SBRY.L: ), Tesco (TSCO.L: ), and Wm Morrison (MRW.L: ) up 0.7 to 1.3 percent.

However, oil majors rallied after recent falls, although crude prices stayed weak, with BP (BP.L: ), BG Group (BG.L: ) and Royal Dutch Shell (RDSa.L: ) up 0.5 to 1.5 percent.

Among individual gainers, British Airways (BAY.L: ) rose 0.6 percent as Morgan Stanley lifted its stance on European airlines to “attractive” from “cautious” as it is more comfortable that passenger cargo and capacity trends will be favorable in 2010.

Mid cap airline easyJet (EZJ.L: ) climbed 2.4 percent after the same broker upped its target price in its sector review.

U.S. blue chips (.DJI: ) were higher in early trade, up 0.5 percent by London’s close, helped by stronger-than-expected U.S. consumer confidence data.

MINERS SHUNNED

Miners were the main drag on sentiment for the FTSE 100 as metal prices declined on demand concerns over fears of possible tighter monetary policy in China.

Among the biggest losers, Fresnillo (FRES.L: ), Kazakhmys (KAZ.L: ), Randgold Resources (RRS.L: ), Xstrata (XTA.L: ) and Lonmin (LMI.L: ) lost 1.5 to 2.3 percent.

Rio Tinto (RIO.L: ) and BHP Billiton (BLT.L: ) dropped 1.1 and 1.0 percent respectively, after EU regulators on Monday launched an investigation into whether a planned $116 billion iron ore production joint venture between the two companies, criticized by steelmakers, will curb competition.

Britain crept out of recession in the fourth quarter of 2009 but only just and with a far weaker growth rate than expected, data showed, suggesting any monetary tightening remains a long way off.

Financials were out of favor with the GDP news, and were still impacted by last week’s proposals from U.S. President Barack Obama to curb banks’ risk-taking ability.

Lloyds Banking Group (LLOY.L: ), Royal Bank of Scotland (RBS.L: ), and HSBC (HSBA.L: ) shed 0.2 to 2.3 percent.

Inter-dealer broker ICAP (IAP.L: ) was the top FTSE 100 faller, down 3.8 percent as investors worried about the impact of President Obama’s proposals on its business.

But Standard Chartered (STAN.L: ) bucked the dull sector trend, adding 2.5 percent to top the FTSE 100 leaders board as Nomura raised its rating to “buy” from “neutral” citing valuation grounds.

Among second liners, UK bookmakers William Hill (WMH.L: ) and Ladbrokes (LAD.L: ) saw good demand, up 3.0 and 2.3 percent, after Cazenove upgraded ratings for both stocks.

Stock Research

(Editing by David Holmes)

Defensives help FTSE higher; miners, banks weak