Banks and miners return to favour but retailers retreat

The FTSE 100 is regaining losses made in the opening moments of the session with bank and mining stock, which was being strictly avoided at this time in Wednesday’s session, returning to favour as risk appetite progressed both in London and in Asian markets as recent fears about the European sovereign debt crisis faded.

Kate Neilson
shareprices.com - Thursday, September 09, 2010

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Lloyds Banking Group is making strong gains on fading Euro debt fears

The FTSE has followed the late rally from the previous session to regain 5,450 status by 10:00GMT, gaining 27 points – the equivalent of 0.5 per cent – on the previous close value to move to 5,457.14.

Posting the most potent gains are banks and miners that are now back in demand with European debt concerns subsiding.

Heading the FTSE 100 gainers is a banking stock, Lloyds Baking Group (LON:LLOY).

The group’s share price has gained three per cent on the back of banking appetite rising and a rating boost from Barclays Capital. The part-nationalised bank also announcement that it will agree to sell its stake in Crest Nicholson to a US investor in an attempt to shed more non-core assets and focus on its core lending activities.

Following closely is fellow part-nationalised sector giant Royal Bank of Scotland (LON:RBS) with a share price gain of almost two per cent.

Barclays (LON:BARC) is also up in the region of two per cent with HSBC Holdings (LON:HSBA) not fairing quite as well with a modest share price improvement of 0.2 per cent.

Banking stock will face further data releases today with the latest interest rate decision due to be announced within the hour. However, the cost of borrowing is expected to be left unchanged according to most analysts.

Mining stock supported bank gains with heavyweight groups Xstrata (LON:XTA), Kazakhmys (LON:KAZ) and Vedanta Resources (LON:VED) all posting gains between 2.5 and 2.2 per cent.

In fact, the mining sector as a whole is up 1.4 per cent this morning.

One stock that is standing out in terms of share price gains is technology firm ARM Holdings (LON:ARM).

The firm has unveiled a new low-power processor today that’s expected to power a range on next-generation technology.

The chip maker, which has close ties with Apple, has seen its shares hit an eight-year high on the back of the unveiling, exceeding the 400p bracket with gains of three per cent.

One sector that is experiencing hard times in this session is retail.

The sector has been hit by two downbeat outlooks from two of the major forces in the sector, Home Retail Group (LON:HOME) and Wm Morrison Supermarkets (LON:MRW).

Home Retail Group, the parent group of Argos and Homebase, reduced its forecast for first-half profits by 20 to 25 per cent with Argos struggling most.

Morrison’s, the UK’s fourth biggest grocer, said it was looking to move into new avenues because the market remains tough this year.

The share prices in the two groups fell three per cent and 1.4 per cent respectively and has took some other retail stock with it too with investor remaining downbeat about growth potential with shoppers cutting back spending.

 

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