The FTSE 100 swung between gains and losses for most of Thursday's session as investors digested a host of economic data, bond auctions in the Eurozone and policy decisions by the Bank of England (BoE) and European Central Bank (ECB).
Nevertheless, the Footsie managed to finish in positive territory, extending a near four-year high from the day before. The index finished at 6,099 on Wednesday and at 6,102 today, its highest closing level since May 22nd 2008.
Chinese trade rebounded strongly last month, boosting sentiment early on. The trade surplus totalled $31.6bn in December, well ahead of the $19.6bn surplus reported in November and the $20bn forecast. Exports jumped by 14.1% year-on-year, ahead of the 5% estimate, while imports also beat expectations rising by 6%, ahead of the 3.5% estimate.
Meanwhile, solid debt auctions in Spain and Italy also provided some support this morning, as Eurozone peripheral bond yields on the secondary market plunged. Specifically, Spanish benchmark 10-year yields dropped below 5% for the first time since March 2011.
At midday, the BoE announced that it has kept its official Bank Rate at 0.5% and its asset purchase programme at £375bn. Analyst Philip Shaw from Investec said that 'on-hold' decision was widely expected. "We characterise recent economic data as mixed rather than gloomy and share some of the MPC's optimism over the potential effects from the FLS. Accordingly we consider the chances that the committee sanctions more QE to be less than 50-50, especially as we expect inflation to exceed 3% later this year."
Shortly after, the ECB also decided to keep rates on hold at 0.75%. In the following press conference, ECB President Mario Draghi reiterated that medium-term inflation expectations remained well anchored and that he expected inflation to come in below or very close to the 2% target this year. While he said that risks to the economic outlook remain on the downside, the Eurozone recovery is expected to begin at the end of the year.
Markets looked like they would finish higher today, but disappointing jobless claims figures in the US erased gains in afternoon trade. Claims for unemployment benefits increased to 371,000 last week, higher than the 365,000 consensus forecast.
FTSE 100: Bunzl rises on acquisition update
International distribution and outsourcing giant Bunzl was a strong riser after completing three further purchases in South America and the US, bringing its 2012 total acquisition spend to 270m pounds. The stock was given an extra lift this morning by Numis which upgraded the shares
to 'buy' and lifted its target price from 987p to 1,248p.
Following close behind was industrial group Melrose after Citigroup raised its view on the stock to 'buy' and hiked its target price from 220p to 270p.
Internet purchases supported a moderate rise in sales at Tesco, according to the supermarket chain's latest trading statement. Group sales in the six weeks to January 5th increased by 3.8% including petrol, causing shares to rise. Oriel Securities also upgraded the stock to 'buy'.
Meanwhile, High Street giant Marks & Spencer was heading lower after reporting worse-than-expected sales figures for the key Christmas period in a trading update that was partially leaked the night before. Like-for-like sales in the UK dropped by 1.8%, worse than the 1.4% decline expected by Nomura.
Associated British Foods fell after Goldman Sachs moved its target price from 1160p to 1190p and maintained a 'sell' rating. Imperial Tabacco Group dropped after Goldman Sachs lowered the target price from 2,500p to 2,470p and reiterated a 'neutral' rating.
Intertek shares were lower after Jefferies downgraded the stock from 'hold' to 'underperform', saying the company could be more at risk from continued weakness in commodities and the challenging situation within the industry.
FTSE 250: SIG leaps despite 2013 forecast
Building materials group SIG surged today despite warning that construction markets in 2013 are to 'remain challenging'. Revenues in 2012 totalled around £2,635m, flat on a constant currency basis, though down by 4.0% in sterling due to exchange rate
movements. Underlying profit is expected to be no less than £82m. Shares were up around 6%.
Recruitment company Hays jumped despite reporting 3% decline in quarterly net fee income and saying that conditions are to remain fragile. Commenting on the group's second quarter, Chief Executive Alistair Cox said: "Whilst several markets around the world were fragile, the fact that we've built such a well-diversified and balanced business enabled us to deliver a solid result in the quarter."
TV decoder maker Pace rose after saying that full-year revenue is expected to be ahead of previous forecasts and 4% higher than last year. The West Yorkshire based firm said it expects revenue to be around $2.4bn after a strong second half.
FTSE 100 - Risers
ARM Holdings (ARM) 863.50p +4.41%
Bunzl (BNZL) 1,049.00p +3.35%
Melrose Industries (MRO) 241.10p +2.81%
Eurasian Natural Resources Corp. (ENRC) 321.60p +2.65%
Wood Group (John) (WG.) 794.50p +2.65%
TUI Travel (TT.) 280.80p +2.15%
GKN (GKN) 240.00p +2.00%
Resolution Ltd. (RSL) 260.70p +2.00%
Royal Bank of Scotland Group (RBS) 356.80p +1.97%
Tesco (TSCO) 355.40p +1.79%
FTSE 100 - Fallers
Intertek Group (ITRK) 3,100.00p -1.90%
Associated British Foods (ABF) 1,520.00p -1.68%
Aviva (AV.) 368.00p -1.53%
ITV (ITV) 107.70p -1.46%
Tullow Oil (TLW) 1,225.00p -1.45%
Tate & Lyle (TATE) 769.50p -1.28%
Johnson Matthey (JMAT) 2,295.00p -1.25%
G4S (GFS) 261.60p -1.17%
Fresnillo (FRES) 1,750.00p -1.13%
BHP Billiton (BLT) 2,132.00p -1.09%
FTSE 250 - Risers
SIG (SHI) 135.00p +6.30%
Hays (HAS) 90.05p +5.32%
Dialight (DIA) 1,060.00p +4.43%
Pace (PIC) 200.80p +4.15%
Lonmin (LMI) 310.00p +4.10%
Unite Group (UTG) 282.00p +3.64%
COLT Group SA (COLT) 103.00p +3.00%
Chemring Group (CHG) 274.10p +2.89%
ICAP (IAP) 326.30p +2.87%
Soco International (SIA) 380.60p +2.86%
FTSE 250 - Fallers
African Barrick Gold (ABG) 364.50p -4.08%
Heritage Oil (HOIL) 203.50p -2.68%
Rentokil Initial (RTO) 91.95p -2.60%
Debenhams (DEB) 104.00p -2.26%
Smith (DS) (SMDS) 203.90p -2.25%
Dechra Pharmaceuticals (DPH) 610.00p -2.24%
Capital & Counties Properties (CAPC) 241.20p -2.19%
Spectris (SXS) 1,971.00p -2.18%
BTG (BTG) 335.30p -2.07%
St. Modwen Properties (SMP) 232.30p -2.07%