RTRS: FTSE ends 1.9 pct higher as Wall St rallies, oils gain
By Jon Hopkins
LONDON, Nov 18 (Reuters) - Britain's top share index ended 1.9 percent higher Tuesday as strong gains on Wall Street and by oil heavyweights offset fresh falls from struggling banks amid more turmoil in the financial sector. At the close, the FTSE 100 .FTSE index was up 76.39 points at 4,208.55, the day's peak, having hit a low of 4,033.40.
The UK blue chip index shed 2.4 percent on Monday, and is still down 36 percent on the year. Strength in oil majors helped the FTSE 100 index rally as crude CLc1 rose above $55.50 a barrel on Tuesday in choppy trade, having slid to a new 22-month low earlier in the session.
BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), and BG Group (BG.L: Quote, Profile, Research, Stock Buzz) took on between 3.9 and 4.1 percent.
U.S. stocks bounced after Hewlett-Packard (HPQ.N: Quote, Profile, Research, Stock Buzz) issued reassuring results and amid talk of a possible 0.5 percentage point Federal Reserve rate cut in December after wholesale inflation data came in weaker than expected. [ID:nOAT001875]
"Stock markets seem to like the biggest ever month-on-month drop in the US producer price index," said David Evans, market analyst at BetOnMarkets.com.
"With inflation also dropping in the UK, markets are hoping that there is now more wriggle room for further rate cuts," Evans added.
News that British annual consumer price inflation tumbled to 4.5 percent in October from 5.2 percent the previous month had little initial impact but added to the positive mix in the afternoon.
"Those figures were really a good surprise and my guess is that we could be faced with another decent [interest rate] cut." said Mike Lenhoff, chief strategist at Brewin Dolphin Securities.
UK banks were among the heaviest bluechip losers with investors unnerved again by capital-raising concerns.
HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) was the biggest FTSE 100 faller, down 15.4 percent as investors bet that any alternative to the bank's takeover by Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) had all but disappeared as comments from British finance minister Alastair Darling seemed to shut the door on alternative scheme gaining access to the government's industry recapitalisation funds.
Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) fell 3 percent, after shareholder pressure forced the bank to alter its fund-raising plans following its decision to take 5.8 billion pounds ($8.73 billion) from Middle East investors. [ID:nLI308688]
Miners were mixed reflecting a balance of commodity price trends and corporate news. Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) shed 8.7 percent impacted by a Cazenove rating downgrade on Monday.
Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz) fell 4.7 percent after the platinum producer posted a below-forecast 19 percent rise in annual underlying earnings per shares.
Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz), however, gained 9 percent as the miner said it does not plan to slow investments in its biggest operations in Chile due to the slowing global economy, although projects abroad may be reviewed. Trading updates provided other blue chip gainers.
Wolseley (WOS.L: Quote, Profile, Research, Stock Buzz) added 8 percent, rebounding after early losses, after analysts cited reassurance on the capital stability of the plumbing and heating supplies company after it said pretax profit had fallen 45 percents. Rexam (REX.L: Quote, Profile, Research, Stock Buzz) gained 1.5 percent after it said in its trading update that its 2008 outlook was unchanged.
But midcap Wellstream Holdings (WSML.L: Quote, Profile, Research, Stock Buzz) dropped 27.1 percent after the oil field services provider gave a cautious view of its prospects for 2009. This knocked blue-chip peer John Wood Group (WG.L: Quote, Profile, Research, Stock Buzz), off 7.2 percent.
