- Int'l Power rises strongly after GDF SUEZ bid
- Spanish 10-year bond yield above six per cent
- Lloyds leads financials lower
Despite a sell-off in the heavyweight banking sector and the soaring borrowing costs on Spanish debt, the Footsie had extended gains by lunchtime with International Power leading the way after receiving a sweetened bid from GDF SUEZ. US stock futures were pointing to a positive start on Wall Street ahead of a first-quarter earnings report from banking giant Citigroup.
The yield on benchmark 10-year Spanish debt has gone through the six per cent barrier as worried investors demanded greater returns if they were to hold the country's debt. Yields reached 6.17% on Monday morning before falling back slightly to 6.08% by around 11:30. The rise comes ahead of key auctions being held on Tuesday and Thursday by the Spanish government.
"It is looking more and more likely that Spain is going to have some form of a bailout," said Lyn Graham-Taylor, an analyst at Rabobank. "Assuming there is not an intervention [from the ECB] you would not see a cap on Spanish yields, they would just keep increasing."
Meanwhile, Wolfgang Münchau, the Eurointelligence President and Financial Times associate editor, has said that Spain's current insistence on extreme austerity measures will inevitably lead to its exit from the Eurozone.
Moody's Investors Service has said that it will delay its publication of a review into European banks until next month. It is "taking an appropriately deliberate approach during this review process and will conclude when it is confident that all relevant information has been received and analysed," the ratings agency said in a statement. The Wall Street Journal has said that 114 banks in 16 European countries are at risk of a downgrade.
In domestic news, Rightmove data has shown that house prices in England and Wales rose by 2.9% month-on-month in April to reach an all-time high of £243,737. This is beat a previous record set in May 2008 by 0.5% and is the largest April increase since 2007.
FTSE 100: Financials sold off but Int'l Power provides a spark
The financial sector was being heavily sold off today with Lloyds Banking Group leading the fallers, dropping nearly 6% by midday. The Co-operative Society is reportedly set to make a decision this week on whether it should press on with its tortuous negotiations with Lloyds over the acquisition of 632 branches from the part-nationalised lender. Sector peers RBS, Barclays and Old Mutual were also lower.
Leading the upside was utilities firm International Power after French shareholder GDF SUEZ raised its bid from 390p to 418p per share. The news has prompted downgrades from Espirito Santo, RBC Capital Markets and Investec this morning, yet the stock was making good gains by lunchtime.
Investec said that it has cut its rating after the new offer came in line with its previous expectations (417p) and says that it does not foresee much regulatory risk to the take-over given that GDF already owns 70% of the company.
Airline IAG, which recently acquired British Midland (BMI), was lower on reports that it is in talks with BMI workers at George Best Belfast City airport over possible job losses.
AMEC, the engineering consultant focused on the resources industry, rose after saying it is on track to deliver double-digit percentage underlying revenue growth in 2012, despite the continued macro economic uncertainty.
FTSE 250: Cairn, Gem provide a lift
Oil and gas group Cairn Energy was a high riser after saying that Agora Oil and Gas, a firm it is set to buy, has struck oil at its Skarfjell Prospect in the Norwegian North Sea. Meanwhile,
Gem Diamonds rose after saying that production had risen in the first quarter despite the value of sales from its biggest mine having fallen.
Sports media group Perform Group was among the worst performers after saying that it has agreed a partnership to integrate its livesport.tv platform, a network of online sports channels, into the so-called 'smart' TV product line of South Korean firm LG.
FTSE 100 - Risers
GKN (GKN) 206.60p +3.71%
International Power (IPR) 416.70p +3.17%
Croda International (CRDA) 2,183.00p +2.39%
Aberdeen Asset Management (ADN) 270.00p +2.31%
Burberry Group (BRBY) 1,601.00p +2.30%
Smiths Group (SMIN) 1,053.00p +2.13%
ARM Holdings (ARM) 601.00p +2.12%
Shire Plc (SHP) 2,000.00p +2.09%
GlaxoSmithKline (GSK) 1,430.00p +2.00%
Centrica (CNA) 319.90p +1.98%
FTSE 100 - Fallers
Lloyds Banking Group (LLOY) 29.21p -5.02%
Royal Bank of Scotland Group (RBS) 24.03p -4.07%
Man Group (EMG) 107.30p -2.45%
Legal & General Group (LGEN) 120.10p -1.96%
Hammerson (HMSO) 400.50p -1.84%
Barclays (BARC) 211.20p -1.72%
Old Mutual (OML) 151.90p -1.68%
International Consolidated Airlines Group SA (CDI) (IAG) 172.30p -1.60%
Aviva (AV.) 301.20p -1.47%
ICAP (IAP) 367.60p -1.29%
FTSE 250 - Risers
Spirit Pub Company (SPRT) 54.25p +3.33%
Cairn Energy (CNE) 330.10p +3.16%
Genus (GNS) 1,284.00p +3.05%
Wetherspoon (J.D.) (JDW) 415.30p +2.64%
Moneysupermarket.com Group (MONY) 132.10p +2.64%
Cable & Wireless Worldwide (CW.) 38.10p +2.42%
Gem Diamonds Ltd. (DI) (GEMD) 269.90p +2.35%
Kier Group (KIE) 1,143.00p +2.33%
Interserve (IRV) 283.30p +2.13%
Dunelm Group (DNLM) 514.00p +2.09%
FTSE 250 - Fallers
Aquarius Platinum Ltd. (AQP) 127.60p -6.04%
International Personal Finance (IPF) 244.00p -4.24%
Bumi (BUMI) 562.00p -3.93%
Elementis (ELM) 197.20p -3.71%
Perform Group (PER) 294.60p -3.41%
Redrow (RDW) 123.00p -2.84%
Renishaw (RSW) 1,307.00p -2.68%
CSR (CSR) 210.40p -2.64%
Centamin (DI) (CEY) 64.50p -2.64%
Exillon Energy (EXI) 123.90p -2.52%