MW : Banks, miners help British shares retake some ground
The U.K. FTSE 100 index (UK:UKX 4,685, +40.26, +0.87%) rose 0.6%, or 27.23 points, to 4,672.24, after closing down 1.5% on Monday. Other European shares were also taking back some sharp losses from the previous day. See Europe Markets.
Shares fell sharply around the world at the start of the week as investors worried that signs of economic growth won't feed through to a strong economic recovery.
Oil prices, which are closely linked to demand, were hit hard on Monday but managed to undo some of the sell-off in Asia trade Tuesday. Light sweet crude for September delivery was up 65 cents to $67.40 a barrel. See full story.
Oil producers advancing in London included Cairn Energy (UK:CNE 2,448, +58.00, +2.42%) , up 1.6%, and Tullow Oil (UK:TLW 1,067, +18.00, +1.72%) , up 1.1%.
Miners were also helping the top London index to gain, with shares of copper miner Kazakhmys (UK:KAZ 889.50, +26.50, +3.07%) up 2.3%.
Rio Tinto (UK:RIO 2,334, +88.59, +3.95%) (RTP 148.40, -9.89, -6.25%) shares climbed 3% in the sector after Amcor said it will pay $2.03 billion for the majority of Rio Tinto's Alcan Packaging business.
Amcor will acquire Alcan Packaging businesses including global pharmaceuticals, tobacco and European and Asian food divisions. See full story.
Banks on the move included HSBC Holdings (UK:HSBA 652.90, +16.10, +2.52%) (HBC 52.61, -1.51, -2.79%) , up 3%.
Goldman Sachs upgraded the banking giant to buy from neutral, saying it now believes the bank's HSBC Finance Corp. unit will cease to be a major drag on group earnings from 2010.
Goldman said the division's core credit-card portfolio shrank rapidly in the first half of 2009, while the broker had been expecting modest growth. Goldman still expects net charge-off rates to rise from here, reflecting rising unemployment.
However, the broker said it now expects cumulative net losses in the division from 2009 through 2012 to be $9.4 billion, down from its previous forecast of $17.6 billion.
Of companies reporting earnings on Tuesday, shares of real-estate developer British Land (UK:BLND 485.80, -10.40, -2.10%) fell 2.7%.
It posted a first-quarter net loss of 273 million pounds, although this was lower than the 565 million pound ($924 million) loss recorded a year ago. Net rental income fell to 101 million pounds, from 127 million pounds a year ago, with rental-value deflation prevalent in most sectors.
British Land said that its portfolio fell in value by 3.7% in the quarter to 8.2 billion pounds, with net-asset-value per share down 9% at 361 pence.
However, the pace of portfolio-valuation decline slowed markedly, the firm said, and evidence of yield strengthening has continued into second quarter.
