FTSE regains 5400 status on UK manufacturing data

The UK’s top index has surged above the 5,400 marker in the opening session of the week, extending the September rally on the back of Friday’s better-than-expects US job data and a new sentiment-boosting report suggesting “buoyant” trading conditions for UK manufacturing.

Rob Hull
shareprices.com - Monday, September 06, 2010

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The Engineering Employment Federation said UK manufacturing is up

The Engineering Employers Federation (EEF) said growing demand overseas has seen a rise in manufacturing activity in the UK, upping the group’s forecast for manufacturing growth by 3.7 per cent this year and a further 3.2 per cent for 2011.

The EEF report is based on a survey of over 500 companies for the three months to August and said these firms took on more staff to cope with the growing demand during the survey period.

Lee Hopley, EEF’s Chief Economist, said: “Importantly - manufacturing indicators are pointing in the direction of expansion. And the importance of demand across export markets has been a more consistent feature of indicators.

“The European market - led by Germany - has been performing better than expected and UK manufacturers have been making good in roads into markets in the Middle East and Asia, where demand remains firm.

“Some further analysis of our survey shows that companies with a greater dependence on export markets are much more likely to report rising output over the past three months.”

The report, backing-up good feeling from Friday’s US job data figures, improved investor confidence in the economic recovery and doused fears of a double-dip recession. And as a result, risk appetite has continued to grow and kept banks and commodities in favour.

HSBC Holdings (LON:HSBA) topped the banking gains, adding 1.3 per cent to its share price with Royal Bank of Scotland (LON:RBS) and Lloyds Banking Group (LON:LLOY) both posting one per cent share price improvements.

Barclays (LON:BARC) however isn’t boding so well after receiving a downgrade. The bank’s share price fell one per cent after Evolution Securities maintained its sell recommendation, cutting its price target by a substantial 12 per cent.

The improved optimism in the economy saw oil and gas producers return to favour with BP (LON:BP) up 1.4 per cent as the most notable gainer after the Financial Times reported the group is continuing attempts to sell its Alaskan assets to cover the damages costs of the spill in the Gulf of Mexico. The oil giant had previously failed to offload the assets to US competitor Apache two months ago.

Topping the FTSE 100 risers charts however is Cable & Wireless Worldwide (LON:CW).

The telecoms group’s share price has soared more than 4.5 per cent after reports suggested Singapore Telecoms is planning a takeover bid for the company.

At 10:40 the blue-chip index is at 5,453.22 – a gain of 25 points and 0.5 per cent.

 

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