Financials rebound from sell-off as Footsie climbs for second day

FTSE: 5,129.42 (+34.12) Mid-250: 9,922.10 (+67.32) Small Cap: 2,925.51 (+8.45): UK STOCKS climbed for a second day yesterday, as banks rebounded from a four-day sell-off amid continuing speculation the Federal Reserve will take action to bolster the US economy.

The FTSE 100 increased 0.7 per cent to 5,129.42 in London.

The gauge lost 5.3 per cent last week after European and US data trailed forecasts, adding to concern the global economy is at risk.

“Speculation on another round of quantitative easing from the US has lifted European markets today,” said Yusuf Heusen, a senior sales trader at IG Index in London.

“Strength in banks is providing further support for the market, although recent experience has made investors wary,” he said.

The Fed is holding its annual symposium in Jackson Hole, Wyoming, this weekend.

“Following an average share price decline of 19 per cent over the last month, we see value in the UK banks overall,” Goldman Sachs’s Frederik Thomasen wrote in a report.

“We prefer HSBC and Lloyds among the UK banks,” he said.

Lloyds jumped 2.7 per cent to 28.3p as Goldman Sachs named the lender among its preferred UK banks.

Royal Bank of Scotland rose 1.7 per cent to 20p. Shares of HSBC gained 0.2 per cent to 512.1p.

G4S jumped 8.5 per cent to 264.4p after reporting a 15 per cent increase in first-half net income to £108 million pounds ($178 million).

Wood climbed 4.6 per cent to 542.5p after the UK oil-services provider active in Africa and the Middle East reported a 17 per cent gain in first-half revenue to $2.83 billion.

ARM rose 4.5 per cent to 514p after the Guardian newspaper, the London-based Times and the Daily Mail all reported that the company may be a takeover target after Hewlett-Packard’s acquisition of Autonomy last week.

Charter soared 20 per cent to 747p after the welding and automation-equipment maker said it has held talks with a potential bidder other than Melrose.

Persimmon gained 3.4 per cent to 396p after the UK’s homebuilder confirmed its full-year completions target.

Fresnillo, the world’s largest primary silver producer, paced declining shares, falling 7.2 per cent to 1,892p after the precious metal lost 1.4 per cent in London. – (Bloomberg)