London Markets: Banks, oil producers pace mild gains for shares
LONDON (MarketWatch) — Banks and oil producers gained ground on Friday, helping the top British share index record modest gains.
The U.K. FTSE 100 index rose 0.4% to 4,270.84, taking back some ground lost in the previous session.
Banks were strong across Europe on Friday. Investors were eyeing news that UBS will raise more capital and post a second-quarter loss. See UBS story. See Europe Markets.
In the London banking sector, shares of HSBC Holdings rose 1.5% while shares of Royal Bank of Scotland advanced 2.1%.
Still, Barclays shares declined 0.7%.
Analysts at UBS noted: “Unlike its peers, that have either to manage legacy assets or to work through a credit cycle, Barclays has to handle both, which will depress returns at least until 2011.”
The Bank of England noted in its bi-annual financial stability review out Friday that an improvement in market conditions, signs of some turnaround in the outlook for global growth and macroeconomic stimulus all constituted positive news for banks.
“That is mirrored in rising equity prices of global banks including the major U.K. banks and large complex financial institutions,” the central bank said.
Still, it also warned that shocks could still destabilize the financial system. See full story.
“A cautionary tone from the Bank of England, saying that financial institutions are not yet immune to further shocks, is unlikely to inspire a gung-ho attitude to risk among investors,” said David Jones, chief market strategist at IG Index on Friday’s muted market action.
Oil and gas producers advance
Oil and gas producers also advanced, with BG Group shares up 1.2% and Royal Dutch Shell shares up 0.9%.
Oil futures edged higher, with the front-month contract up 44 cents at $70.69 a barrel.
Other gainers included British Airways , up 2.1%.
The firm said that 800 of its staff have agreed to work for free for up to one month, part of almost 7,000 workers who have accepted pay cuts to help the carrier slash costs.
British Airways said that it will save up to 10 million pounds from the staff pay cuts.
Outside the top index, shares of housebuilder Berkeley Group Holdings rose 2.4%.
The group said the sales market has been “extremely challenging” but the last quarter has seen stabilization in sales prices and improved transaction levels.
The firm posted a profit for the fiscal year ending April 2009 of 86.1 million pounds ($141.3 million), against a profit of 137.8 million pounds a year ago. Fiscal year revenue for the group fell 29% to 702.2 million poundsr.
Shares of Imagination Technologies declined 5.1%, paring some sharp gains made this week on hopes for a takeover battle.
It said that Apple Inc will subscribe for 2.2 million of its shares at 1.4275 pounds per share. Apple, like fellow shareholder Intel, license Imagination’s technology.
London Markets: Banks, oil producers pace mild gains for shares
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