London shares moved higher on Friday, with WPP leading the advance after the advertising giant reported flat profit for 2008 but said that trading for 2009 has been ahead of plan.
WPP shares jumped 9% in early trading, after it revealed that its net income totaled 513.9 million pounds in 2008 compared to 515.1 million pounds recorded in 2007. Revenue rose 20.9% to 7.5 billion pounds, after billings increased 16.6% to 36.9 billion pounds.
WPP also said that it expects comparable revenue to fall 2% in 2009 and global advertising spending to fall by 4%, compared to 2% growth in 2008.
"We have only preliminary revenue and profit data for January and February and this does show a difference in the trend of revenues against last year, although operating profits were better than budgeted. The first two months of 2008 were, in any event, relatively strong months for like-for-like revenue growth," said the firm.
Analysts at Investec Securities noted: "Our sense is that figures and outlook are not as bad as they could have been and shares already discount a material slowdown."
The U.K. FTSE 100 index rose 0.8% to 3,556.37. Other European shares rose, as did U.S. stock futures. Friday's gains aside, the FTSE 100 has fallen roughly 7% this week, tracking declines across other equity markets around the globe.
"Equity markets have fallen further over the past week, as weak economic conditions have continued to exert strong downward pressure on profit and dividend estimates," noted Darren Winder, head of macro strategy at Cazenove.
More weak data is expected on Friday, when the Labor Department will release its latest snapshot of the job market on Friday at 8:30 a.m. Eastern. Economists are predicting non-farm payrolls fell by 650,000 in February, the largest one-month job loss in almost 60 years as the recession tightened its grip on the economy. Read more on U.S. jobs data.
Morgan Stanley U.K. equity strategists said that the economic outlook has deteriorated substantially over the last six months and said that they're now predicting U.K. corporate profits to fall 60% over this downturn. This would be a bigger drop than seen in the early 1930s.
"Our forecasts assume that the banks sector makes around a 20 billion pound loss in 2008 and 2009 and that the insurance sector makes no profit in 2008," they said.
Still, the strategists said that their new FTSE 100 target is 3,500, close to where the index is currently trading.
"In reality, our new earnings forecasts are unlikely to surprise the market -- indeed we would argue that one of the catalysts for the latest sell-off is the realization that economic and earnings expectations needed to fall further," they said.
Financials in focus on Friday included Lloyds Banking Group up 4.2%.
The BBC reported late Thursday that the bank is close to a deal with the U.K. government to insure around 250 billion pounds ($353 billion) of its assets.
On the downside, construction materials firm Wolseley fell 15.2%.
It said that it will raise around 1 billion pounds ($1.41 billion) through a rights issue and the sale of shares to institutional investors as it also said it swung to a 6-month net loss of 777 million pounds, from a profit of 65 million pounds a year earlier.
Trading has weakened further in recent months, especially in the U.S., and the board has decided it's appropriate to recapitalize the group.
