London close: 'Fiscal cliff' hopes lift markets

11th Dec 2012 16:56

- Fiscal cliff optimism increases ahead of FOMC- German ZEW smashes expectations- Tullow drops 8.4 per centAfter a weak start, the FTSE 100 finished Tuesday's session with slight gains on the back of increasing optimism about the 'fiscal cliff', as well as a better-than-expected reading of German sentiment."The improved sentiment in the markets today has been largely come from the US," said market analyst Craig Erlam from Alpari."It appears that negotiations over how to avoid the fiscal cliff at the end of the year are actually starting to go somewhere. Details of the discussions between Obama and Boehner haven't been released but it now appears to be a case of deciding which entitlements to cut back on."Meanwhile, the Federal Open Market Committee (FOMC) meeting will conclude tomorrow with analysts expecting the Fed to announce a new long-term bond purchase programme valued at $45bn per month as "Operation Twist" comes to an end.Stock markets across Europe pushed into the blue this morning after the German ZEW Institute's economic sentiment index shot up to 6.9 points in December from -15.7 the month before. The consensus estimate was for a slight improvement to -11.5. Analyst Thomas Harjes from Barclays Research said that the results "bode well for our forecast of a rebound in economic activity early next year even if further improvements in investor expectations turn out to be more modest in coming months."Also helping the mood this morning was a Spanish debt auction which sold €3.89bn of 12- and 18-month bills, ahead of the €3.5bn targeted. They were sold at lower yields than the previous auction.FTSE 100: Tullow sinks after Ghanaian well updateOil giant Tullow tanked on Tuesday after revealing that its Okure-1 exploration well offshore Ghana had encountered 'low net to gross oil bearing reservoir in a secondary objective'. The markets seemed to shrug off its other announcement that it plans to buy Norwegian exploration group Spring Energy for $372m and dispose of its non-core gas assets in the North Sea.Costa and Premier Inn owner Whitbread topped the risers following an in-line third-quarter trading update, in which it revealed that total sales were up 14.4% year-on-year. Investors didn't seem to mind that like-for-like sales growth had slowed to 3.3% from 4.3% in the first half.Polymetal International was also a strong performer after saying that it has entered into a definitive agreement with AIM-listed Ovoca Gold to acquire the Russian legal entity Olymp, which holds the mining and exploration license for the Olcha gold-silver deposit.Mining group BHP Billiton rose after Nomura named it as its preferred name in the global metals and mining industry. Sector peer ENRC however dropped into the red after Citigroup downgraded its rating on the stock to 'sell'. Citi expects that the company will be in breach of its banking covenants in the first half which set out that it ought not to have a level of net debt of more than three times EBITDA.HSBC was higher after reaching an agreement with US authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws. HSBC will make payments totalling $1.921bn and take further action to strengthen its compliance policies and procedures. Johnnie Walker, Smirnoff and Guinness owner Diageo was in the red after saying that it has called off talks to buy tequila giant Jose Cuervo after being unable to "agree a transaction".FTSE 250: Domino Printing and Victrex provide a dragIndustrial coding, printing and marking technology group Domino Printing was among the worst performers after reporting a small decline in annual profit as it battles against tough market conditions.High performance polymer manufacturer Victrex tanked after full-year revenues rose just 2% to £219.8m. Victrex was also lower after Numis cut its rating for the stock to 'reduce'. In contrast, chip specialist Imagination Tech gained after Deutsche Bank raised its recommendation to 'buy' ahead of tomorrow's first-half results.Coal miner Bumi was also on the rise on speculation that its Chief Executive Nalin Rathod could resign from the board tomorrow amidst an investigation into "potential financial irregularities" at its division, Bumi Resources, in Indonesia.Spread betting firm IG Group was out of favour after revealing a 14% reduction in its revenue for the period June 1st to November 30th, reflecting particularly tough comparators with last year benefitting from high market volatility.Bakery and hot snacks retail chain Greggs was lower as investors continued to fret over the departure of its Chief Executive Ken McMeikan who announced yesterday that he would be leaving for catering firm Brakes Group.FTSE 100 - RisersPolymetal International (POLY) 1,116.00p +2.67%Evraz (EVR) 252.30p +2.48%Whitbread (WTB) 2,488.00p +2.47%Weir Group (WEIR) 1,845.00p +1.77%Pennon Group (PNN) 617.50p +1.73%BHP Billiton (BLT) 2,054.50p +1.61%CRH (CRH) 1,175.00p +1.56%Sainsbury (J) (SBRY) 347.00p +1.49%WPP (WPP) 870.50p +1.22%Severn Trent (SVT) 1,573.00p +1.16%FTSE 100 - FallersTullow Oil (TLW) 1,150.00p -8.44%Eurasian Natural Resources Corp. (ENRC) 266.10p -3.66%Rolls-Royce Holdings (RR.) 871.00p -2.30%IMI (IMI) 1,072.00p -1.83%Diageo (DGE) 1,855.50p -1.64%Experian (EXPN) 1,028.00p -1.25%Tate & Lyle (TATE) 761.00p -1.04%BG Group (BG.) 1,065.00p -0.98%Burberry Group (BRBY) 1,304.00p -0.91%Randgold Resources Ltd. (RRS) 6,330.00p -0.86%FTSE 250 - RisersDechra Pharmaceuticals (DPH) 635.50p +6.09%Sports Direct International (SPD) 404.00p +4.66%Bumi (BUMI) 284.60p +4.63%Shanks Group (SKS) 80.00p +4.58%Imagination Technologies Group (IMG) 448.40p +4.45%Intermediate Capital Group (ICP) 305.10p +3.28%Petra Diamonds Ltd.(DI) (PDL) 107.20p +3.08%Lonmin (LMI) 279.80p +2.87%F&C Asset Management (FCAM) 98.80p +2.76%Bwin.party Digital Entertainment (BPTY) 110.00p +2.71%FTSE 250 - FallersNew World Resources A Shares (NWR) 245.00p -9.29%Domino Printing Sciences (DNO) 571.00p -6.39%Victrex (VCT) 1,553.00p -5.07%Ruspetro (RPO) 83.25p -3.25%Greggs (GRG) 461.70p -2.29%BH Global Ltd. USD Shares (BHGU) 11.14 -2.28%IG Group Holdings (IGG) 427.20p -2.20%Cairn Energy (CNE) 262.40p -2.16%Supergroup (SGP) 596.50p -2.05%COLT Group SA (COLT) 95.60p -2.00%BC