Blue-chip stock index recovers morning losses on brighter borrowing picture

After this morning's tumble the FTSE 100 index recovered to trade up by 0.2 per cent by 13:15 BST. By midday stocks were broadly higher, Lloyds Banking Group is near the top of the list, up 2.4 per cent.

Retail sales data came in better than was expected today. Retails sales volumes for July was 1.1 per cent higher than for June, economists expected 0.4 per cent. Retail stocks got a solid shot in the arm, with WM Morrison Supermarkets up 2.3 per cent, J Sainsbury up 1.7 per cent and Kingfisher showing a jump of 1.5 per cent.

Public borrowing figures also came in better than expected. Economists predicted borrowing figures for July 2010 to reach £5.25 billion, but government figures released today showed borrowing requirements were £3.8 billion.

Both news pieces combined to create a favourable climate for this morning's recovery. A mix of stocks posted solid gains, including ARM Holdings up 4.7 per cent, Serco Group up 3.3 per cent and British Airways up 2.2 per cent.

However prices on some shares moved down. Inmarsat is posting substantial losses, down 2.9 per cent so far. UBS changed their lookout for the stock from "buy" to "neutral". UBS analysts say that investors will have long to wait to realise gains from massive infrastructure investment. Profit taking on yesterday's gains also played a role.

BHP Billiton's $39 billion bid for Canadian firm Potash is affecting its credit rating, with S&P saying the company may be overextending itself as it put the company's A+ rating under review. BHP Billiton is down 0.28 per cent.

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