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London leading shares rise for third day while Wall Streeet turns negative

Leading shares in London rallied for a third day after a strong report on US durable goods orders allayed fears that the world’s largest economy is sliding back into recession. The data outweighed a sharp drop in German business confidence, the biggest decline since the aftermath of the Lehman Brothers collapse in late 2008.

The FTSE 100 index yo-yoed in early trading but pushed through the 5200 mark and finished 76.43 points higher at 5205.85, a 1.5% gain. It lost more than 5% last week amid global recession fears. Germany’s Dax rose 2.7% on Wednesday, while France’s CAC was up 1.8%.

On Wall Street, however, the Dow Jones turned negative and traded down more than 30 points at 11145.

Gains on the FTSE were led by Man Group, which leapt 20p, or 10.2%, to 208.4p after HSBC lifted its recommendation on the hedge fund manager to “overweight” from “underweight”, citing strong management fees. Advertising giant WPP, which reported better-than-expected profits, climbed 43p, or 7.4%, to 604p.

Tullow Oil also advanced, adding 79.5p to £10.11, after reporting higher profits, while commodity trader Glencore moved 22.15p higher to 389.6p ahead of results tomorrow. Chip designer ARM rose 16p, or 3.1%, to 529p on speculation that Apple’s new iPhone 5, due to be launched in October, could boost volumes.

Bank stocks rallied after suffering heavy losses in recent weeks. Royal Bank of Scotland Group added 1.87p, or 9.4%, to 20.6p, but remained down 39% so far this month. Lloyds Banking Group rose 1.8p, or 6.4%, to 29.9p.

The biggest loser was car insurer Admiral, as record half-year profits were overshadowed by investor concerns about a likely ban on referral fees on personal injury claims and a rise in the group’s loss ratio. Outsourcing firm Serco, which runs prisons, London’s Docklands Light Railway and other infrastructure, warned of headwinds in its core UK and US markets, which sent its shares 21p lower to 506p.

Falling metals prices hit the miners, with Randgold Resources and Fresnillo among the biggest fallers on the FTSE 100. Randgold dropped 230p to £63.64 while Fresnillo slipped 20p to £18.81.

On the FTSE 250, developer Unite was the best performer for much of the day but later slipped to third place. It saw its shares advance 10.5p, or 6.9%, to 163.4p after posting solid results and reinstating its dividend, at 0.5p for the first half. The company sees no slowdown in the student accommodation market, thanks to a steady influx of foreign students into London, who it reckons will be unaffected by rising tuition fees.

James Carswell at Peel Hunt said:

Unite shows strong rental growth, resumes dividend payments and owns a large development pipeline. Despite negative sentiment regarding higher education reforms, Unite’s portfolio is well positioned and we expect demand for purpose-built student accommodation to remain robust. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds