Shares open November with biggest gain in a month

LONDON Thu Nov 1, 2012 5:16pm GMT

1 of 2. A red London bus passes the Stock Exchange in London February 9, 2011.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - Britain's blue-chip index made its biggest single session gain in four weeks on Thursday as a number of firms posted solid results and investors took on fresh bets at the start of a new month.

The FTSE 100 index closed up 79.22 points at 5,861.92, a rise of 1.4 percent, the biggest gain since Oct 1, with banks alone adding nearly 20 points.

Lloyds Banking Group was the top gainer in the index, rising 8.2 percent after results which revealed that the bank's exposure to bad debt had fallen, helping bring up other banks such as Barclays, which had released disappointing results in the previous session.

The FTSE ended October on a downbeat note, losing 1.2 percent during Wednesday's trading, following a string of gloomy earnings and outlooks from firms such as BG Group, Barclays and GlaxoSmithKline.

However, stocks recovered on Thursday in strong volumes of 140 percent of the 90-day average.

"I think the most important thing is that it's the first day of the month," Andy Ash, Head of Sales at Monument Securities, said. "I would think that a lot of it is about funds closing down their October positions, and opening up new ones for November."

Today's session made it the 10th first trading day of the month this year out of 11 to have seen positive for the FTSE.

Nick Xanders, head of European strategy at BTIG, said the same was true of stocks across Europe, and also attributed much of the day's move to fund inflows and reallocation. He said that while the market was in part responding positively to earnings and the reopening of U.S. markets, further gains in the near term may be limited.

"We've got so much uncertainty in the next week or so, ahead of the U.S. payrolls tomorrow and elections on Tuesday, it'd be hard pressed to move much higher from here before then."

Many firm's gains reflected their strong reports, above and beyond improved fund flows. Telecoms firm BT Group gained 6.8 percent, despite missing expectations for second-quarter revenues, as traders pointed to encoraging EBITDA, which was in-line, and earnings, which were slightly ahead.

"Overall we believe much of the revenue weakness had been expected and there may be some relief that it is not worse," Espirito Santo Investment Bank said in a note.

Pay-TV and telecoms provider BSkyB also benefitted from good results, up 7.1 percent in volume of 3 times its 90-day average, as its first-quarter earnings rose 16 percent, with Numis Securities hiking its rating for the stock to "buy" from "add".

On the downside, chemicals firm Croda International lost 1.3 percent in volume of 5 times its 90-day daily average, after it said trading weakened in September, with month-on-month trading volatile. It was the most heavily traded stock in the FTSE 100.

"As a specialty chemical producer in the all natural oleochemical space Croda should be resilient to a global economic downturn but, as today's statement demonstrates, it is not totally immune" said Canaccord Genuity analyst Alicia Forry, repeating a "sell" stance on the stock.

(Additional reporting by Jon Hopkins and Karen Rebelo; editing by Ron Askew)

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