28th Jan 2014 17:17
LONDON (Alliance News) - The UK's main stock indices closed firmly higher Tuesday with the FTSE100 breaking a five-day losing streak, as London's equity markets regained some ground after falling sharply over the past few sessions.
UK markets were helped by UK gross domestic product numbers, with the figure for the whole of 2013 marking the best rate of annual growth since 2007.
The FTSE 100 closed up 0.3% at 6,572.33, the FTSE 250 closed up 1.2% at 15,715.83, having closed lower for three consecutive days previously, and the AIM All-Share index closed up 1% at 859.11, also snapping three days in the red.
The GDP figures showed national output expanded 1.9% in 2013, the highest rate since 2007. However, GDP remained 1.3% below the peak in the first quarter of 2008. From peak-to-trough in 2009, the economy shrank 7.2%.
There was also a slight slowdown in the fourth quarter, with GDP up 0.7% compared with 0.8% growth in the third quarter. The growth was driven by the services sector, which was partly offset by a contraction in the construction sector.
"There had been some fear that adverse weather and a decline in December's PMI's could weigh on this figure, but in the end it didn't disappoint," said Kathleen Brooks, research director at FOREX.com.
David Kern, chief economist at the British Chambers of Commerce, welcomed Tuesday's data as "encouraging news", pointing out that Britain was now outperforming most European economies.
Despite this, the pound fell against the dollar in the immediate aftermath of the data.
"There are a couple of reasons for this," said Brooks. "First, the market could be concerned that growth may be revised lower if December's bad weather disrupted construction activity more than thought in the first reading. Second,from a technical perspective, GBPUSD was looking overbought on the hourly charts ahead of the GDP report, so unless we saw a number bigger than expected, a sell off was to be expected."
Nevertheless, the currency has managed to regain some of its losses, trading at USD1.6587 at the close of the London equity markets.
On the continent, Europe's major equity indexes closed higher, buoyed in part by unexpected increases in both French and Italian consumer confidence.
Survey data released by statistical office Insee revealed that France's headline consumer confidence index advanced to 86 in January, from 85 in December, beating expectations that the index would remain unchanged. Italian consumer sentiment jumped to 98.0 in January, up from 96.4 in December, and significantly better than the more modest rise to 97.0 that was expected.
The German DAX 30 closed up 1%, while the French CAC 40 closed up 0.6%.
The European markets were supported by a smaller rebound in major US indices, excluding the Nasdaq which was being hit by the weak outlook that technology giant Apple gave late Monday.
After the European markets closed, the DJIA and S&P500 were both trading up 0.3%, while the Nasdaq composite was down 0.1%.
The US was being helped by the consumer confidence index, which climbed to 80.7 in January from a downwardly revised 77.5 in December. Economists had expected the index remain steady at the 78.1 originally reported for the previous month.
At the individual UK stock level, Carnival, closing up 2.8%, was amongst the biggest winners in the blue-chip index. The cruise company jumped on the back of strong results form its rival Royal Caribbean, which revealed that its 2013 earnings per share came in at USD3.17, 4% ahead of consensus expectations.
Fresnillo, on the other hand, closed down 3.1% and was the biggest loser. The company's attributable gold production in 2013 reached 425,831 ounces, down 10% from the 473,034 ounces it produced in 2012, and lower than its revised production guidance of 425,900 ounces.
In the FTSE 250, F&C Asset Management closed up 5.4%, making it the index's second-top gainer. Just a day after it revealed it had been approached by Bank of Montreal, it Tuesday said it had agreed a GBP708 million deal. The asset manager's shareholders will receive 120 pence a share in cash, as well as the 2 pence a share dividend for 2013 F&C had already announced.
Afren, ending up 4.1%, was another of the index's biggest winners. The company said it achieved the upper-end of its 2013 production guidance and improved revenues following a major oil find offshore Nigeria.
Still to come on the economic front, the January Federal Open Market Committee meeting, Ben Beranke's last, starts late Tuesday. The Federal Reserve policy makers are expected to announce a further cut to the central bank's quantitative easing programme when the meeting ends Wednesday.
In the data calendar Wednesday, German Gfk consumer confidence and UK Nationwide housing prices are released at 0700 GMT, ahead of Italian business confidence at 0900 GMT. US MBA mortgage applications information is released at 1200 GMT.
In the corporate calendar, FTSE 100-listed Anglo American and Antofagasta release production reports, while FTSE 250-constituents BTG and Britvic, amongst others, release interim management statements.
By James Kemp; [email protected]; @jamespkemp
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