Well-received corporate earnings from a number of heavyweight stocks gave markets a boost on Tuesday with the FTSE 100 holding on to a two-and-a-half-month high ahead of some key US data.
Trading updates and results from blue chips Reckitt Benckiser, BHP Billiton, GKN and Whitbread all impressed the market early on; even ARM Holdings managed to erase all its earlier losses following the release of its third-quarter figures.
Also supporting markets this morning was an improved outlook for UK public finances after net borrowing excluding financial interventions came in at £11.1bn in September, some £1bn down on last year and lower than analysts' forecast.
Analyst Simon Hayes from Barclays said that underlying trends in borrowing are "extremely difficult to gauge" due to a multitude of one-off special factors, "but [today's data] looks marginally positive".
The FTSE 100 was trading up 0.24% at 6,670 by around midday; the index has not closed above this level since August 1st when it finished at 6,681.98.
Following the end of the government shutdown, a backlog of US data should begin to unwind this week with last month's employment report likely to garner the most attention today. However, the figures will have less clout than normal given that they are already over two weeks old.
Nevertheless, consensus forecasts are pointing to an 180,000 increase in US non-farm payrolls last month, higher than the 169,000 gain seen in August. Meanwhile, the unemployment rate is expected to have remained unchanged at 7.3%.
Chief Economist Simon Smith from FxPro explained that the survey was undertaken before the shutdown took effect, so markets will likely be wary of "the extent to which subsequent developments have undermined any strength in the economy".
Investors are hoping that the shutdown - which is likely to have dampened US growth in the fourth quarter - will prompt the Federal Reserve to delay tapering its stimulus programme until next year.
Fed Bank of Chicago President Charles Evans said yesterday that the central bank may not taper for "a few months" given due to the cloudy economic outlook. Evans said that he wants to see "consistent" growth in non-farm payrolls of over 200,000 each month and a lower jobless rate before the Fed can make a move.
Reckitt, BHP, GKN, Whitbread rise after results
Household products group Reckitt Benckiser was a high riser after lifting its full-year revenue guidance slightly following a strong third quarter and a decent performance by recent acquisitions. The company said it now expects to grow net revenue excluding Reckitt Benckiser Pharmaceuticals (RBP) by "at least 6%" in 2013, compared with the previous forecast of the "upper end of the +5-6% range".
BHP Billiton was also in demand after the world's largest miner raised its forecast for annual iron ore production whilst maintaining guidance for oil, copper and coal output.
Engineering firm GKN advanced after a 16% increase in group sales to £1.87bn and a 34% jump in profits in the third quarter, helped by a good performance from its auto and commercial aerospace divisions.
Meanwhile, Whitbread's interim earnings rose ahead of expectations as its Premier Inns hotels and Costa coffee shops continued to grab market share. Total sales rose 12.2% in the first half.
Chip designer ARM Holdings pushed into positive territory following some heavy losses early on as investors digested its third-quarter results. Investors gave a mixed reaction to the figures despite a strong 36% jump in pre-tax profits to £92.6m.
SSE was lower after Ofgem banned energy suppliers from increasing prices on fixed-term tariffs in a bid to create a "simpler, clearer and fairer" energy market for customers.
Property group Grainger was a high riser on the FTSE 250 after JPMorgan Cazenove raised its rating on the stock from 'neutral' to 'overweight', saying that UK house price inflation is not yet priced into the shares.
FTSE 100 - Risers
Reckitt Benckiser Group (RB.) 4,740.00p +5.33%
BHP Billiton (BLT) 1,936.00p +3.34%
GKN (GKN) 369.70p +1.99%
British American Tobacco (BATS) 3,385.00p +1.47%
Carnival (CCL) 2,123.00p +1.34%
Legal & General Group (LGEN) 209.70p +1.30%
Aberdeen Asset Management (ADN) 421.60p +1.15%
RSA Insurance Group (RSA) 123.50p +1.15%
Admiral Group (ADM) 1,230.00p +0.99%
Standard Chartered (STAN) 1,510.00p +0.97%
FTSE 100 - Fallers
easyJet (EZJ) 1,319.00p -2.87%
International Consolidated Airlines Group SA (CDI) (IAG) 359.30p -1.40%
Smith & Nephew (SN.) 786.50p -1.38%
Persimmon (PSN) 1,234.00p -1.28%
Kingfisher (KGF) 373.00p -1.19%
SSE (SSE) 1,435.00p -1.17%
Vedanta Resources (VED) 1,060.00p -1.03%
Weir Group (WEIR) 2,305.00p -0.95%
Fresnillo (FRES) 970.00p -0.82%
BT Group (BT.A) 364.90p -0.68%
FTSE 250 - Risers
Supergroup (SGP) 1,143.00p +3.07%
Grainger (GRI) 189.10p +2.77%
esure Group (ESUR) 236.60p +2.51%
RPS Group (RPS) 295.00p +2.25%
African Barrick Gold (ABG) 161.90p +2.02%
Bwin.party Digital Entertainment (BPTY) 121.10p +2.02%
BH Macro Ltd. USD Shares (BHMU) 19.69 +1.60%
BH Macro Ltd. EUR Shares (BHME) € 19.90 +1.53%
Ashmore Group (ASHM) 409.80p +1.49%
Telecity Group (TCY) 838.50p +1.45%
FTSE 250 - Fallers
UBM (UBM) 703.00p -5.51%
Kenmare Resources (KMR) 21.22p -4.63%
Diploma (DPLM) 667.00p -3.05%
Victrex (VCT) 1,628.00p -2.46%
Barratt Developments (BDEV) 339.80p -2.07%
Taylor Wimpey (TW.) 110.80p -1.95%
Thomas Cook Group (TCG) 147.80p -1.92%
Workspace Group (WKP) 467.00p -1.89%
Redrow (RDW) 251.00p -1.80%
Renishaw (RSW) 1,598.00p -1.66%