Leading index rises to best level for four weeks in shortened trading session
Leading shares were in festive mood on Christmas Eve, reaching their best level for nearly four weeks.
In a curtailed half day trading session, which meant trading volumes were unusually thin, the FTSE 100 finished 15.56 points higher at 6694.17, its fifth straight day of gains and its highest since 25 November.
The leading index is currently up nearly 14% on the year so far and is on course for its best annual performance since 2009, when it rose 22%.
Investors have been heartened by recent positive economic news from the US, which has outweighed concerns about the Federal Reserve’s decision last week to begin trimming its $85bn a month bond buying programme by $10bn.
There was also relief in China, where fears of a credit crunch had been growing, after the People’s Bank of China topped up last week’s $50bn (£30.6bn) injection of liquidity into the markets with another $4.8bn (£3bn) on Tuesday morning.
Among the risers, BSkyB added 20.5p to 833p after a report of possible bid interest from mobile phone group Vodafone, up 0.25p at 236.4p.
The satellite broadcaster also announced a $350,000 investment in Californian video start up Jaunt. The company said the investment would provide it with “additional insight into developments within the field.”
Earlier Fitch confirmed BSkyB’s credit rating at BBB+ with a stable outlook. The agency said:
Sky’s pay-TV and communications business continues to be robust despite a weak macroeconomic environment and increased competitive pressures from other triple-play service operators in the UK. Sky should be able to adapt to intensifying competition and manage its free cashflow generation with a disciplined approach to shareholder remuneration.
But Arm suffered some profit taking after recent rises, falling 15p to £10.95. It had been boosted earlier in the week by news that one of its key customers, Apple, had signed a deal with China Mobile.
Tullow Oil lost 10p to 838p after it said its an exploration well at the Mantra prospect off the coast of Norway had failed to find oil and gas, the latest in a string of disappointments for the company. The well will now be plugged and abandoned.
Andrew Whittock at Liberum Capital kept his buy rating on Tullow, which has an 80% interest in the Mantra licence, but said:
The well was meant to be relatively low risk and would have been a material contributor to analysts’ expected monetary value (around 20p). There may be a noticeable share price impact. We believe there is virtually nothing in the price for exploration. At the current price, most of the exploration comes for free (except the next 12 wells in Kenya). Our 1446p price target assumes that the historic track record is replicated and that there is further exploration success. To buy the shares from current levels, investors have to believe significant new discoveries will continue to be made and those discoveries are required to deliver share price performance.
Lower down the market Northern Petroleum fell 1.875p to 31.75p after an independent report into its Rovesti and Giove discoveries in the southern Adriatic sea classified the recoverable oil as 2C rather than 2P. 2C is a measure of the best estimate of contingent resources, while 2P means the reserves are proven and probable. In addition, the Italian environmental minister has asked for further information related to proposed 3D seismic surveys across all permits in the region, which means further delays to the company’s projects.
Northern’s broker Westhouse cut its price target from 120p to 110p on the news, saying:
We maintain our buy rating as possible progress in Italy and the start of drilling in Canada in early January 2014 still have the potential to provide positive newsflow.
Finally Royal Mail, in its second day as a member of the FTSE 100, slipped another 1.5p to 578.5p on further profit taking.
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