London close: Stocks rise as Fed speculation continues

4th Jun 2013 16:55

Speculation surrounding the future of the Federal Reserve's stimulus programme continued to drive market sentiment on Tuesday as stocks rebounded on hopes that the US central bank will delay scaling back measures as it awaits a firmer recovery.The FTSE 100 rose 33 points (+0.51%) to 6,559 today after hitting a one-month low on Monday following a mixed bag of May manufacturing figures worldwide.However, it has been a case of "bad data is good" for markets today after Monday's worse-than-expected reading of US factory activity prompted comments from some policymakers that scaling back quantitative easing this month would be premature. It was also revealed today that the US trade deficit widened in April, which will likely drag on economic growth in the second quarter.All eyes are now turning to the ADP jobs figures tomorrow, which is usually seen as a rough indicator for what to expect from the official US non-farm payrolls report due out on Friday. Analysts are predicting that the economy added around 170,000 jobs in May. "European markets have concluded a choppy session, ending the day marginally higher on a muddle of continued central bank interpretation and data," said Financial Trader David White from Spreadex. "The feeling in the market is one of mild anxiety, with strong gains behind us and a feeling of uncertainty ahead."Economic data provides a boostAs the focus remains firmly fixed on incoming economic data from the states, indicators from closer to home helped the bullish mood today. The UK construction sector unexpectedly returned to growth in May, boosted by a surge in house building. The construction purchasing managers' index (PMI) rose to 50.8 in May from 49.4 in April. The last time the index was above 50, which indicates an expansion, was in October 2012. Analysts were expecting a smaller rise to 49.8.Meanwhile, UK retail sales rebounded in May driven by demand for furniture and flooring, the British Retail Consortium (BRC) revealed. Like-for-like sales at stores open at least 12 months grew by 1.8% from a year earlier after dropping 2.2% in April.Markets were also reacting to a substantial fall in Spanish unemployment of 98,300 in May, the largest fall in 11 months. Analysts were expecting a decline of just 50,000.FTSE 100: GKN jumps after upbeat broker commentsGKN's shares surged Tuesday after UBS lifted its target price and retained it's 'buy' rating, saying the engineering group has "more than meets the eye". The broker said that GKN is well positioned following the acquisitions of Getrag and Volvo Aero which have transformed its Driveline and Aerospace divisions. Another big riser, easyJet, gained following comments from Prime Markets that the airline's impressive growth over the past year was set to continue. The analyst reiterated a 'buy' recommendation and issued a target price of 1,355p for the stock. The move comes one day after the International Air Transport Association raised its 2013 profit forecast for the whole industry.Heading the other way was plumbing and heating products group Wolseley which slumped as investors focused on a slowdown in US sales growth and ongoing weakness in Europe in the third quarter, shrugging off news of a sharp improvement in the UK.Steel maker Evraz continued to set new all-time lows, affected by negativity in the Chinese market for the alloy. Traders and steel makers in China, which accounts for 60% of global sea-borne iron-ore imports, have been selling stocks in the wake of fears over the outlook for demand in the industry.Biopharmaceuticals giant AstraZeneca fell after saying that it will be hit by a one-off impairment charge worth $140m after admitting that it has decided not to pursue a regulatory filing for fostamatinib, an oral drug it was hoping could be an alternative treatment for rheumatoid arthritis.FTSE 250: Cobham sinks on reported shareholder saleDefence and aerospace group Cobham was in the red after a late report last night said an unnamed "institutional investor" sold 39.1m shares in the company via a placing, equal to a 3.6% stake. The sale, valued at £111m, was priced at a 4.4% discount to last night's close, according to Bloomberg.Leading the upside today was New World Resources, the Central European hard coal and coke producer, which rebounded strongly after hitting a 52-week and all-time low of 97.05p yesterday. Even including today's bounce, the stock has lost nearly 70% since the start of 2013 on the back of tough conditions in global coking coal markets and lowered production guidance for the current year.Hedge-fund manager Man Group was also a high riser, rebounding after hitting a one-month low yesterday. Panmure Gordon said yesterday that the group is now at the bottom of its earnings cycle, as it reiterated its 'buy' rating for the stock. The broker is looking for "strong recovery in profits" in the current year.Gold miners African Barrick Gold and Petropavlovsk were in the red, tracking the price of the yellow metal lower. Investec trimmed its 2013 forecast for the price of gold today from $1,675 an ounce to just $1,400 an ounce.FTSE 100 - RisersGKN (GKN) 313.40p +5.06%easyJet (EZJ) 1,263.00p +3.44%Land Securities Group (LAND) 946.00p +1.94%HSBC Holdings (HSBA) 731.90p +1.89%Vodafone Group (VOD) 192.05p +1.83%Old Mutual (OML) 205.60p +1.68%Tesco (TSCO) 364.45p +1.67%London Stock Exchange Group (LSE) 1,404.00p +1.67%Associated British Foods (ABF) 1,867.00p +1.63%Aberdeen Asset Management (ADN) 463.90p +1.62%FTSE 100 - FallersWolseley (WOS) 3,145.00p -6.32%Evraz (EVR) 134.00p -2.69%Smiths Group (SMIN) 1,349.00p -1.60%Randgold Resources Ltd. (RRS) 5,130.00p -1.54%Antofagasta (ANTO) 956.00p -1.49%Anglo American (AAL) 1,518.50p -1.40%Aggreko (AGK) 1,687.00p -1.11%GlaxoSmithKline (GSK) 1,692.00p -0.68%Tullow Oil (TLW) 1,055.00p -0.66%Vedanta Resources (VED) 1,284.00p -0.54%FTSE 250 - RisersAnite (AIE) 132.50p +5.24%New World Resources A Shares (NWR) 101.00p +4.07%RPS Group (RPS) 215.30p +3.71%NMC Health (NMC) 306.00p +3.38%IG Group Holdings (IGG) 600.00p +3.27%Bellway (BWY) 1,305.00p +3.16%F&C Asset Management (FCAM) 98.10p +2.94%AZ Electronic Materials SA (DI) (AZEM) 321.50p +2.88%Diploma (DPLM) 545.00p +2.83%3i Group (III) 343.80p +2.66%FTSE 250 - FallersCobham (COB) 272.90p -4.61%Petropavlovsk (POG) 131.60p -3.94%Hochschild Mining (HOC) 235.00p -3.33%FirstGroup (FGP) 120.40p -3.22%Lancashire Holdings (LRE) 761.50p -2.93%African Barrick Gold (ABG) 134.50p -2.89%Domino Printing Sciences (DNO) 650.00p -2.69%Kentz Corporation Ltd. (KENZ) 393.90p -2.50%Carpetright (CPR) 617.00p -2.30%Kazakhmys (KAZ) 322.80p -2.12%