Are you sure?

FTSE up 1.2% at midday; oils, miners banks advance

  Britain’s leading share index was up 1.2% at midday on Friday, led by strength in miners, oils, and banks and extending the strong end seen to 2008 into the first session of 2009.

By 1204 GMT, the FTSE 100 index was up 54.36 points at 4,488.53, just below the session peak of 4,487.86 albeit in very thin volumes. “Today is largely irrelevant,” said Chris Bennett, senior trader at binary betting firm ChoiceOdds, “2009 doesn’t really start until Monday, with the City empty and no-one around.” The UK blue chip index closed 41.49 points higher on Wednesday at 4,434.17, but finished a dismal 2008 with a 31.3% decline, the biggest annual fall in its 24-year history.

Commodity issues were in demand again at the start of 2009 having fuelled the last-gasp rally in London at the end of 2008. Oil issues added the most strength to the FTSE 100 index, gaining despite crude prices falling on Friday as traders bet a late-day rally which drove prices up about 14% on Wednesday was overdone.

Shares in Royal Dutch Shell, BP, BG Group, Tullow Oil and Cairn Energy gained between 1.3 and 2.7%. Miners advanced as the sector sought to put the woes of last year behind it, with Vedanta Resources, Eurasian Natural Resources, Kazakhmys, Antofagasta, Xstrata, Rio Tinto, and Anglo American up between 6.5 and 12.1%. A recovery by hard-pressed banking issues also helped the blue chips, with HBOS, HSBC, Royal Bank of Scotland, Lloyds TSB, and Barclays all gaining between 1.6 and 5.1%.

Prominent politicians are calling for a ban on short-selling of financial stocks to be extended by the City watchdog when it expires in two weeks, the Financial Times said. Retailers also rallied as John Lewis, the employee-owned group seen as a barometer of UK retail spending, said on Friday sales surged at both its department stores and up-market grocery chain in the days before and after Christmas.

Marks and Spencer, which delivers a Christmas trading statement next week, added 0.4%, with Next gaining 0.5%, Kingfisher up 1.3%, Sainsbury ahead 2.2% and Tesco up 0.3%. But the downturn in consumer spending will drive over 1,600 British retailers out of business in 2009, triggering thousands of job losses and leaving more than one in ten shops empty, a report by market researchers Experian said on Thursday.

Drug stocks were the biggest drag on the FTSE 100, falling back after strong gains over the last sessions of 2008, with GlaxoSmithKline losing 1.9%, and AstraZeneca down 1.1%. Non-life insurers, also a fairly resilient sector in 2008, were weak as well, with Amlin off 2.0% and Admiral Group down 1.8%.

Macro news remained grim. British house prices fell by a record 16.2% year-on-year in December, taking them to their lowest level since August 2004, data from the country’s biggest mortgage lender, Halifax, showed on Friday. Prices fell by a bigger-than-expected 2.2% in December alone, and are now 20% below the peak set before the start of the credit crunch in mid-2007. (Reuters)