Tuesday afternoon market update

Dec 1 2009 By nebusiness

LONDON'S blue chip share index bounced back with a 1.7% rise today as investor worries over the global impact of the Dubai debt crisis began to subside.

The FTSE 100 Index raced 85.7 points ahead to 5276.4 by the mid-session, with other indices also making advances. France’s Cac 40 was 2% ahead, while the Dax in Germany lifted by 1.9%.

Futures trading on Wall Street pointed to a higher opening for the Dow Jones Industrial Average as well, which helped sentiment further on this side of the Atlantic.

The Footsie had shed 55 points in the previous session, but was on the front foot after government-owned Dubai World announced plans to restructure almost half its estimated 60 billion US dollars of debt, amid ``constructive" discussions with banks.

There was further soothing news from Fitch Ratings after the agency said ratings of major UK banks were not expected to be affected by their exposures to the Middle East.

HSBC rose 3%, or 18.3p to 725.3p, while Asian-facing bank Standard Chartered soared 63.5p to 1547.5p.

And Royal Bank of Scotland, which is seen as one of the UK banks most exposed to the Dubai debt crisis, lifted 0.8p to 33.9p.

Among other top risers in London, miners Fresnillo and Eurasian Natural Resources were leading the revival, ahead 49p at 892p and 62.5p at 1546.5p respectively.

Property companies were also in favour after Morgan Stanley said the market under valued leading firm Hammerson’s UK development prospects. Hammerson rose 14.4p to 415.1p, while Liberty International added 15.5p to 481p and Segro added 10.2p to 335.7p.

But tour operators TUI Travel and Thomas Cook were among a handful of stocks in the red, dipping 2% each as they gave back some recent gains, despite news of higher annual profits at Thomson owner TUI.

TUI lost 5.6p to 420.3p and Thomas Cook eased 3.5p to 208.5p.

Outside the top flight, housebuilders were in positive territory after the Nationwide said house prices rose for the seventh month in a row during November.

Charles Church owner Persimmon lifted 24.5p to 438.1p, while Barratt Developments added 5p to 123.2p and Bovis Homes cheered 15.6p to 405.4p.

Brewer and pubs chain Greene King was another strong riser in the FTSE 250 Index after posting a 3% rise in half-year profits. It also told investors that it was confident of further progress in the second half, causing shares to rise 5% or 19.3p to 420.6p.

Rival firm Mitchells & Butlers was another riser, up 4% or 9.7p to 262.2p, as it defied its biggest shareholder by announcing the appointment of senior director Simon Laffin as chairman.