Banks and miners continue positive FTSE form

The UK’s top index looks set to post a six successive growth today with banks and commodities at the forefront of gains. Banking stocks have been buoyed by government bond auctions yesterday and expectations that Chancellor George Osborne will confirm as less intrusive levy on the sector. The successful bond auctions has helped the euro rally against the dollar and sent commodity prices higher.

Rob Hull
shareprices.com - Wednesday, June 16, 2010

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RBS heads the FTSE 100 risers this morning

Yesterday’s government bond auctions eased tensions over the eurozone and resulted in investors eyeing more risk-status stocks.

The auctions in Ireland, Belgium and Spain re-affirmed investor confidence and fanned the flames of concern over the state of Europe’s economy and solving the debt crisis.

As a result, previously suspected risky bank stocks have proved popular in this morning’s session with Royal Bank of Scotland (LON:RBS) heading the FTSE 100 risers charts with gains of 2.8 per cent.

The banking sector as a whole has been lifted by the bond auctions with investors pushing Standard Chartered (LON:STAN) and Barclays (LON:BARC) stock up by more than one per cent and Lloyds Banking Group (LON:LLOY) also pushed above the one per cent marker with gains of 1p.

Despite the strong auction results and five consecutive days of positive movement for the blue-chip index, the upward trend could be hampered by today’s unemployment figures which grew by 23,000 between February and April and Nationwide Building Society's latest survey which said consumer confidence has fallen to its lowest level in a year during May.

Some 2.46m people are now registered as out of work in the UK, nudging the jobless rate in the country to 7.9 per cent. And Nationwide’s report sourced the election and resulting emergency budget as the confidence-killer for consumers last month.

Also positing gains in this morning’s trading is the mining and energy sector with commodity prices being pushed higher by the euro’s recovery against the dollar following the eurozone bond auctions.

Metal prices firmed to push sector big wigs like Xstrata (LON:XTA) and Rio Tinto (LON:RIO) up. But Fresnillo (LON:FRES) and Lonmin (LON:LMI) eased after JPMorgan downgraded both statuses to ‘underweight’ from ‘neutral’ after reviewing the sector.

Energy stocks had a more positive outlook as the eurozone recovery appeared to outweigh sector concerns brought on by the BP (LON:BP) oil spill crisis.

Cain Energy (LON:CNE) stock is over 1.6 per cent up at 10:00BST and Royal Dutch Shell (LON:RDSA) is shadowing the growth with a 1.3 per cent increase in price.

At 10:00BST the FTSE 100 index is 0.3 per cent up after gaining 40 points earlier in the session to be 0.75 per cent up before the unemployment figures were released at 08:30BST.

 

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