Banks drive FTSE higher as Barclays reports better than expected profits

Beating forecasts, Barclays promoted high interest in banking shares which drove the FTSE index higher rising by 0.7% at midday. Commodity stocks also rose based on higher metals and oil prices.

Chris Bradshaw
shareprices.com - Tuesday, February 16, 2010

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Barclays

Shares in Barclays rose by more than 7% by midday as the marker responded to a higher than expected profit of £ 11.6 billion, an increase of 92% on 2009 profits. Barclay's sale of BGI Fund Management unit contributed £6.6 billion. Arturo de Frias, analyst at Evolution, said: 'They have surprised positively in revenues, particularly in investment banking. The stock was trading at such low prices because of capital concerns, liquidity concerns, earnings concerns."

Solid gains were made in other UK banks with HSBC, Standard Chartered and Lloyds Banking Group rising by 2 – 4%.

Drinks stocks also rose with Diageo rising by 0.4% and SAB Miller adding 0.8% to £ 16.92. This repaired declines from recent trading sessions. Mining companies lifted the market with Rio Tinto taking on 2.2% in response to climbs on ore price forecasts with Merrill Lynch analyst Jason Fairclough stating: "The market is materially underestimating the potential iron ore price settlement for 2010."

Other stocks contributing to a climb in the FTSE include Premier Foods, owner of the Mr. Kipling and Hovis brands. Rising 3% it made a bottom-line profit of £47m, returning to the black. CEO Robert Schofield was very positive about the "tremendous amount" Premier Foods had achieved in 2009.

However some stocks were down with Domino's Pizza UK & Ireland dropping by 2.6p even though profits increased by 27.8% as Domino's warned that the unpredictable economic environment may affect future profits.

 

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