RTRS: FTSE inches up as bank gains offset mining losses
Britain's top share index edged higher early on Monday, as gains in the banking sector outweighed a slide in commodity stocks, hurt by worries about the outlook for demand for raw materials.
By 0905 GMT, the FTSE 100 .FTSE had gained 5.41 points, or 0.1 percent, to 4,453.95, having slid 1.3 percent on Friday, contributing to a loss of 2.5 percent for the first trading week of 2009.
Miners were the heaviest losers, with concerns about slowing demand, as a result of economic woes, continuing to hurt the sector.
"Markets are looking for reasons to be positive but they're finding it quite difficult ... there are some early signs of confidence returning to consumers, albeit with the spectre of unemployment limiting this," said Neil Parker, market strategist at Royal Bank of Scotland.
Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz) was among the biggest FTSE 100 losers, down 4.5 percent after ABN AMRO downgraded the stock to "hold" from "buy".
"We still like their business model but believe the upcoming results season could prove more challenging than some in the market anticipate," the broker said in a note to clients.
Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) and Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) fell between 1 and 1.6 percent.
Oil heavyweight BP (BP.L: Quote, Profile, Research, Stock Buzz) fell 0.6 percent as crude slid beneath $40 a barrel, weighed by persistent fears about energy demand after a big rise in U.S. unemployment was revealed by data released on Friday.
However, other oil stocks were relatively robust, with Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), BG Group and Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) in positive territory.
Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) was a big gainer on the blue-chip index, up 4.7 percent on a report that private equity firms Apollo Management and BC Partners have joined with former Norwich Union boss Patrick Snowball to mount a late bid for the bank's insurance division. [ID:nLB165423]
Positive sentiment on the banking sector was also supported by reports that Citigroup (C.N: Quote, Profile, Research, Stock Buzz) was closer to joining its Smith Barney business with Morgan Stanley's brokerage operation (MS.N: Quote, Profile, Research, Stock Buzz) in a move that would create the world's largest brokerage. [ID:nN11285547]
Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) were among the biggest gainers, up 3.1 and 4.7 percent respectively, following news that the British government is to take a 43.4 percent stake in the combined bank.
Prime Minister Gordon Brown is expected to pledge to stop rising unemployment caused by the financial crisis from becoming a long-term problem following a special jobs summit with industry leaders later in the day.
With the economy sliding towards recession, Brown will say that he will announce plans this week to help people who have been unemployed for more than six months. [ID:nL9508583].
Shares in 3i Group (III.L: Quote, Profile, Research, Stock Buzz) fell 4.9 percent after Morgan Stanley cut its stance on the private equity group to "equal weight" from "underweight" with a reduced price target of 350 pence, down from 710 citing de-gearing risk.
Hedge fund outfit Man Group (EMG.L: Quote, Profile, Research, Stock Buzz) was the heaviest losers, sliding 5.2 percent after Citi downgraded it to "sell" from "hold" ahead of an assets under management update due later in the week.
