BAE surges after announcing share buyback as Footsie closes higher

FTSE: 5,873.21 (+16.63) Mid-250: 11,615.57 (+16.63) Small Cap: 3,272.53 (–7.66)

UK STOCKS climbed yesterday, as results from BAE Systems to BT outweighed the continued stalemate between US lawmakers on how to increase the nation’s debt limit and avoid a default.

The benchmark FTSE 100 rose 16.63, or 0.3 per cent, to 5,873.21 at the close in London.

“Investors proved their resilience to be able to prevent a mass sell-off even if US politicians continue to threaten their country’s AAA rating,” said Angus Campbell, head of sales at Capital Spreads in London. “Bond markets are yet to have panicked and as a result equities have recovered.”

The US House of Representatives plans to vote on a Republican proposal to increase the debt limit. House Speaker John Boehner of Ohio gained support among fellow Republicans after reworking the legislation to cut $917 billion over 10 years.

In the UK yesterday, nine FTSE 100 companies released results, while a further four, including British Airways-owner International Consolidated Airlines and British Sky Broadcasting, are expected to report today.

BAE rallied 4.9 per cent to 306.8p after the arms company announced a £500 million share buyback and a lower tax rate.

BT jumped 3.8 per cent to 197.9p following three days of declines. The UK’s largest fixed-line phone company said first-quarter operating profit rose 2.6 per cent as it won high-speed broadband clients and market share from rivals.

Shire rallied 4.2 per cent to 2,136p after the Dublin-based drugmaker raised its sales forecast. The company also reported second-quarter profit that beat analyst estimates.

Satellite services company Inmarsat gained 3.9 per cent to 537p after LightSquared struck a 15-year pact with Sprint Nextel to share network expansion costs and equipment.

ITV also advanced, rallying 3.1 per cent to €71.05 as analysts recommended the shares following yesterday’s conference call with analysts.

Inchcape surged 8.4 per cent to 390p after the operator of car dealerships reported first-half pretax profit that topped analyst estimates, led by sales in Russia and emerging markets.

Carnival fell 3 per cent to 2,161p after rival Royal Caribbean Cruises forecast lower earnings than previously predicted. – (Bloomberg)