Tuesday afternoon market update
Dec 22 2009 By nebusiness
CITY dealing rooms were awash with pre-Christmas cheer today as the FTSE 100 Index saw its second straight day of strong gains.
The London market reached the mid-session 53.8 points ahead at 5347.8 as the ’Santa rally’ pushed the blue-chip benchmark to within 50 points of its year-high seen last month. US markets are expected to add to the high spirits later.
Oil stocks continued their solid run as oil cartel OPEC elected to keep production unchanged in 2010 as expected, while market heavyweights GlaxoSmithKline and AstraZeneca were also in demand.
The pound fared less well after disappointing official figures showed GDP contracted by 0.2% in the third quarter, weaker than the 0.1% decline or flat performance predicted by analysts.
The prospect of interest rates remaining lower for longer saw the pound dip below 1.60 dollars and 1.12 euros at one point.
Cairn’s recent rally follows the oil explorer’s announcement that drilling off the coast of western Greenland will start a year ahead of schedule. Shares closed 5% higher yesterday and were up another 9.2p to 332.7p today.
Elsewhere in the sector, Royal Dutch Shell lifted 46p to 1813p and BP added 10p to 601.1p despite crude prices easing slightly on a better day for the dollar.
Among pharmaceutical firms, Glaxo added 2% or 36.5p to 1327.5p and AstraZeneca cheered 48.5p to 2885.5p.
Other stocks to benefit from the pre-Christmas rally included Marks & Spencer, which added 4.9p to 404p, and insurer Standard Life after a gain of 5.3p to 210.5p.
The London Stock Exchange was the Footsie’s leading riser, up 20.5p to 726.5p as investors mulled yesterday’s deal to buy 60% of smaller rival Turquoise. Citi brokers said the deal could have long-term benefits but was unlikely to ease competition significantly and maintained a sell rating on the firm.
The leading faller was British Airways - down 3.3p to 189.7p - as investors wondered over the impact of severe weather disruption on Christmas travel just days after it averted a devastating strike.
The FTSE 250 Index saw strong gains in the housebuilding sector after Goldman Sachs changed its recommendation on Taylor Wimpey and Barratt Developments to buy from neutral. Shares in Taylor lifted 1.27p to 35.61p and Barratt added 2.3p to 116.3p.
In a quiet session for corporate news, 888 Holdings lifted 0.7p to 112.2p after it announced plans to buy internet rival Wink Bingo for up to around £60 million.
