FTSE rebounds on strong oils and financials

By Atul Prakash

LONDON (BestGrowthStock) – Britain’s top shares rebounded on Monday after falls in the past two sessions, boosted by oils and banks, with better-than-expected results from Citigroup (C.N: ) and hopes of more U.S. economic stimulus improving sentiment.

The FTSE 100 index (.FTSE: ) ended 39.15 points, or 0.7 percent, higher at 5,742.52 after falling last Thursday and Friday. The index is up 6 percent so far this year.

Energy shares featured among the top gainers, tracking a jump of 1.5 percent in crude prices on strikes at French refineries. Royal Dutch Shell (RDSa.L: ), BG Group (BG.L: ) and Tullow Oil (TLW.L: ) added 0.7 to 2.3 percent. Risky assets such as equities were also helped by economic numbers. Data showed U.S. industrial production unexpectedly fell in September, while capacity utilization eased slightly.

“U.S. industrial production report may have reaffirmed hopes that we will receive some additional measures by central banks going forward and that might have pushed the market further,” said Keith Bowman, equity analyst at Hargreaves Lansdown.

“We saw above-expectation results from Citigroup, which also added to sentiment. But going forward, we are likely to see the same level of volatility that we have seen, with a significant level of uncertainty still likely in the coming months.”

Citigroup reported a stronger-than-expected quarterly profit as credit losses slowed.

Financial stocks were among the top gainers, with Standard Chartered (STAN.L: ), HSBC (HSBA.L: ), Barclays (BARC.L: ) and Lloyds (LLOY.L: ) rose 1.1 to 2.9 percent.

“Investors have understood that the worst case scenario is no longer the most likely,” Societe Generale said in a note, referring to the risk of recession in the United States and deflation in Europe having been all but ruled out.

“Blue chip companies are flourishing and earnings outlook remains positive. All of these factors should give heart to investors and incite them to move progressively back toward equities.”

MINERS UNDER PRESSURE

But miners extended Friday’s falls, with BHP Billiton (BLT.L: ) and Rio Tinto (RIO.L: ) falling 0.6 and 1.5 percent respectively after ditching plans to form the world’s biggest iron-ore joint venture.

“The announcement that Rio Tinto and BHP Billiton won’t be proceeding with their joint venture, combined with broker downgrades for Antofagasta, Vedanta and Xstrata, has unsurprisingly left the mining sector struggling,” said Anthony Grech, head of research at IG Index.

Anglo American (AAL.L: ), Antofagasta (ANTO.L: ), Xstrata (XTA.L: ) and ENRC (ENRC.L: ) fell 0.5 to 1.5 percent.

Retailers were weak as investors awaited the British government’s Comprehensive Spending Review on Wednesday, which is expected to involve a swathe of cuts to the public sector that could hit consumer spending hard, traders said.

Tesco (TSCO.L: ) was off 0.4 percent, while Home Retail (HOME.L: ), the owner of Argos which reports results on Wednesday, was down 0.5 percent.

Among individual movers, BlueBay Asset Management (BBAY.L: ) leapt almost 30 percent as Royal Bank of Canada (RY.TO: ) pounced to buy the fund manager for around 963 million pounds ($1.5 billion).

BP (BP.L: ) was up 1.6 percent. It has agreed to sell a package of oil and gas fields in Vietnam and Venezuela to its Russian joint venture TNK-BP (TNBPI.RTS: ) for $1.8 billion as the London-based oil major raises cash to pay for its Gulf of Mexico oil spill.

(Additional reporting by David Brett; Editing by David Cowell)

FTSE rebounds on strong oils and financials