London midday: Footsie nudges higher despite poor data

1st Dec 2011 12:02

UK stocks have jumped into positive territory after European bond auctions saw strong demand, but gains are likely to be limited by a string of poor manufacturing data out this morning. Investors will still be digesting the news of a co-ordinated intervention by major central banks to provide cheap access to dollar funding which sent equities soaring yesterday.Spain sold €3.75bn of government bonds in an auction which has seen yields on four-, five- and six-year bonds rise. Meanwhile, France sold €4.35bn in notes, with five- and 30-year bond yields increasing and 10- and 15-year yields falling. Both auctions saw stronger demand than before.Italian 10-year bond yields declined after the auctions and were down 27 basis points to 6.75%, below the dangerously high level of 7% which many believe is unsustainable. All eyes will be turning to the 9 December European Union summit, after economic affairs commissioner Olli Rehn warned that European leaders have only 10 days left to save the euro. MANUFACTURING DATA DISAPPOINTSUK manufacturing output fell for the second month in a row in November, reaching its lowest levels since June 2009. The Markit/CIPS manufacturing purchasing managers' index (PMI) fell to 47.6 last month, down from an upwardly revised figure of 47.8 in October (47.4 previously). Any figure below 50 represents a contraction. Manufacturing activity in the Eurozone fell to levels not seen in 28 months in November, while job losses were reported in 15 out of the 17 nations using the single currency. According to Markit, the manufacturing PMI for the region fell to 46.4 compared to 47.1 in the previous month. This is the lowest reading since July 2009 and the fourth consecutive reading below 50.Meanwhile, the China Federation of Logistics & Planning's PMI declined from 50.4 to 49.0 in November, under a 49.7 estimate from a Dow Jones survey. This was the first contraction since March 2009. The HSBC manufacturing activity index also fell below 50 to 47.7, from 51 the month before. KINGFISHER, FRESNILLO ON THE UPB&Q owner Kingfisher rose strongly after retail profits increased by 13% in the third quarter on sales that were up 3.5%. Chief executive Ian Cheshire said: "Our well-established programme of self-help initiatives has continued to drive our growth despite these difficult times for European consumers."With precious metals prices gaining in morning trade, silver and gold miner Fresnillo was among the better performers. Gold prices hit a two-week high of $1,753.50 a troy ounce earlier in the day.Sector peer Rio Tinto nudged higher after claiming victory in its agreed bid for Canadian firm Hathor. So far, shareholders representing just over 70% of the Canadian uranium explorer's issued share capital have accepted Rio's offer, which values Hathor at $654m. Power systems giant Rolls-Royce was higher after securing a $350m contract from Hawaiian Airlines to deliver Trent 700 engines to power five Airbus A330 aircraft. Retailers have taken a hit today, after Investec made a number of downgrades in the sector. The broker downgraded both Marks & Spencer and Debenhams from buy to hold, and cut its rating for KESA Electricals, Mothercare and Howden Joinery from hold to sell."Consumer confidence is once again near all-time lows, as household incomes are squeezed by fiscal tightening and declining real incomes. With CY11E and CY12E sector earnings forecasts falling, we are retaining our Underweight stance on the sector," Investec analysts said.BCFTSE 100 - RisersResolution Ltd. (RSL) 247.30p +4.97%Kingfisher (KGF) 264.50p +3.48%Burberry Group (BRBY) 1,310.00p +3.15%Fresnillo (FRES) 1,760.00p +2.68%Amec (AMEC) 890.00p +2.48%Wolseley (WOS) 1,944.00p +2.26%International Consolidated Airlines Group SA (IAG) 150.50p +2.03%Imperial Tobacco Group (IMT) 2,331.00p +1.88%Standard Chartered (STAN) 1,409.00p +1.81%Intertek Group (ITRK) 1,955.00p +1.61%FTSE 100 - FallersLloyds Banking Group (LLOY) 24.14p -2.78%ICAP (IAP) 345.90p -2.65%Lonmin (LMI) 1,043.00p -2.52%Royal Bank of Scotland Group (RBS) 20.56p -2.05%ITV (ITV) 63.50p -1.93%Cairn Energy (CNE) 267.40p -1.80%Inmarsat (ISAT) 429.50p -1.69%IMI (IMI) 785.00p -1.63%GKN (GKN) 191.70p -1.44%Barclays (BARC) 177.70p -1.41%FTSE 250 - RisersDiploma (DPLM) 361.00p +8.28%RPC Group (RPC) 352.60p +4.85%Supergroup (SGP) 481.50p +4.54%International Personal Finance (IPF) 205.70p +4.42%Bellway (BWY) 750.00p +2.88%Kenmare Resources (KMR) 36.31p +2.28%SThree (STHR) 247.90p +2.18%Ashtead Group (AHT) 188.20p +2.01%QinetiQ Group (QQ.) 128.50p +1.82%Kier Group (KIE) 1,440.00p +1.77%FTSE 250 - FallersThomas Cook Group (TCG) 17.13p -6.34%Northgate (NTG) 227.80p -5.79%Berendsen (BRSN) 419.80p -5.07%Laird (LRD) 149.40p -4.78%Premier Foods (PFD) 5.61p -4.43%Petropavlovsk (POG) 694.00p -4.28%Allied Gold Mining (ALD) 192.90p -3.93%Grainger (GRI) 105.50p -3.92%Logica (LOG) 77.35p -3.67%Galliford Try (GFRD) 485.00p -3.58%