Asset managers pull FTSE into positive territory

LONDON Wed Feb 6, 2013 5:24pm GMT

1 of 3. The London Stock Exchange is seen during ther morning rush hour in the City of London April 11, 2011.

Credit: Reuters/Toby Melville

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LONDON (Reuters) - The FTSE 100 nudged into positive territory on Wednesday on a strong showing from asset managers following robust results from Hargreaves Lansdown, which outweighed declines in energy stocks.

The FTSE 100 closed up 12.58 points, or 0.2 percent, at 6,295.34, having risen 0.6 percent the previous session after suffering its sharpest one-day percentage drop in three months on Monday.

While choppy trade in recent days has raised questions over the FTSE 100's ability to sustain its recent strength - with the index on Wednesday having swung from 6,265 through 6,321 - strategists reckon more gains are likely.

"It's likely to see near-term consolidation because it's a bit overstretched, but fundamentally we're relatively constructive," UBS strategist Nick Nelson said.

Hargreaves Lansdown jumped 11.2 percent, grabbing the top spot on the blue-chip leaderboard after it unveiled hefty increases in first-half profit, sales and assets.

Major banks have been cutting trading staff and, in some cases, battling fallout from rate-rigging scandals. But while trading volumes are generally in decline, co-founder Peter Hargreaves said his firm was finding new clients at an unprecedented rate, boding well for the sector.

Blue-chip peers Schroders and Aberdeen Asset Management rose 2.9 percent and 1.2 percent respectively, and midcap Henderson climbed 2.4 percent.

The fourth-quarter earnings season in Europe has got off to a fairly solid start. A quarter of companies have reported so far, with 60 percent having beaten or met expectations, according to Thomson Reuters Starmine data.

Heavyweight energy stocks fell, with traders citing profit-taking after gains in the previous session when both BP and BG Group posted results.

Barclays weighed in on both oil majors on Wednesday.

The bank trimmed its target price for BG to 1,420 pence to reflect a lower level of LNG profitability, though reiterated its "overweight" recommendation. Its shares shed 0.6 percent.

The bank was cautious on BP, off 0.6 percent, on which it has an "underweight" rating, highlighting continued risks associated with remaining claims over the Gulf of Mexico oil spill.

Among commodity stocks, Kazakh mining group ENRC surged 9.1 percent to 372 pence, boosted by the company's strong quarterly output and media talk that it could be a takeover target.

"The Q4 production report, while mixed does show good growth in production of saleable ferroalloys and ferrochrome, and this coupled with expectations of a strong 2013 as stated by CEO Felix Vulis should at the very least underpin the stock at current levels," Richard Curr, head of dealing at Prime Markets, said in a note.

Several British newspapers carried reports of traders hearing speculation about a takeover bid from major shareholder Alijan Ibragimov at around 6 pounds a share.

Trading volume in ENRC was robust, at 257 percent of its 90-day daily average, against the FTSE 100 on 100 percent.

(Reporting by Tricia Wright; Editing by John Stonestreet)

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