FTSE rally spearheaded by service sector PMI and TUI Travel report

The UK’s blue-chip index is regaining the losses made in Monday’s session this morning as energy and bank stocks return to favour. Financials were also helped by better-than-expected service sector PMI which has boosted the value of the Sterling. Tuesday has also brought a surge of positive corporate results with travel giant TUI Travel (LON:TT) being highlighted in the news this morning.

Kate Neilson
shareprices.com - Tuesday, October 05, 2010

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TUI Travel has reported a growth in holiday bookings

At 10:30GMT, the FTSE 100 is 0.6 per cent up with a gain of 34 points to reach a value of 5,590.

Banks are doing their fair share to haul London’s top index higher, backed by fresh services activity growth reports that rose unexpectedly in September.

Last month, the services PMI was at a 16-month low of 51.3. However, with a forecast of 51 for September, investors have been given a mild boost by a reading of 52.8.

Analysts have said the results will ease tensions about the possibility of a double-dip recession in the UK, but the survey did show the weakest inflow of new business in a year which suggests the reading will drop as the year draws to a close.

With the Bank of England expected to keep interest rates on hold, banks are, for the meantime, back in favour.

Standard Chartered (LON:STAN), HSBC Holdings (LON:HSBA) and Lloyds Banking Group (LON:LLOY) have all seen their share prices advance more than one per cent on Tuesday with both Barclays (LON:BARC) and Royal Bank of Scotland (LON:RBS) edging close to single percentage share price gains, too.

Also back in favour after posting widespread sector declines yesterday are oil and gas producers. With crude prices rallying, the sector has managed to claw back much of the loss created by the downturn on Monday.

Essar Energy (LON:ESSR) heads the gains with a share price advancing at a rate of 1.4 per cent.

Sector giants BP (LON:BP), Royal Dutch Shell (LON:RDSA) and BG Group (LON:BG) are all posting share price gains too, all in the region of 0.5 per cent.

TUI Travel, the travel parent group of Thomson Holidays and First Choice, is the top FTSE 100 gainer with a share price bounding ahead by almost five per cent.

Europe’s largest travel company said holiday bookings for the winter and next summer have picked up, helped by the demise of several smaller competitors.

The group said net debt should fall more than previously predicted with winter holiday sales in the UK up by 17 per cent year-on-year and summer 2011 bookings advancing five per cent in the UK.

Also making good headway on the back of a corporate release is the world’s third biggest retailer, Tesco (LON:TSCO). The supermarket chain said first-half profits had risen 14.1 per cent with a buoyant performance in Asia offsetting downbeat results in the UK.

Tesco’s share price moved over one per cent higher as a result of these figures and has dragged fellow retailers higher with Sainsbury (LON:SBRY) shares gaining more than 0.3 per cent ahead of it’s half-year results release on Wednesday.

 

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