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European shares steady, Britain's FTSE hits new record peak
January 5, 2017 / 9:58 AM / 10 months ago

European shares steady, Britain's FTSE hits new record peak

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* Britain’s FTSE 100 hits new record high

* Housebuilders and miners support the index

* STOXX Europe 600 index trading flat

By Atul Prakash

LONDON, Jan 5 (Reuters) - European shares steadied near their recent highs on Thursday, with Britain’s top equity index climbing to a new record high following a rally in housebuilders and miners.

The pan-European STOXX 600 index, which had climbed to a one-year high earlier this week, was flat by 0937 GMT, while Britain’s blue-chip FTSE 100 was up 0.1 percent after climbing to a new record high of 7,211.96 points.

Persimmon rose 5.2 percent after Britain’s second-biggest housebuilder by volume said sales had risen 15 percent since Britons voted in June to leave the European Union. It also posted an 8 percent rise in 2016 revenue to 3.14 billion pounds ($3.9 billion) and said profits for the year would be at the top end of expectations.

“With solid increases in average selling prices and legal completions, Persimmon’s growth continues despite the uncertainty around the UK’s impending exit from the EU,” said George Salmon, analyst at Hargreaves Lansdown.

“With a healthy balance sheet, demand outstripping supply and no sign of borrowing costs rising in the foreseeable future, Persimmon looks in a strong position.”

Other property-related stocks also rose, with Taylor Wimpey and Barratt Development both up 3 percent.

The market was also supported by miners. Precious metals miners Fresnillo, Randgold Resources and Centamin were 1.6 to 1.9 percent higher after gold touched its highest in four weeks on a weaker dollar.

Newly merged Italian bank Banco BPM advanced nearly 4 percent, outperforming a 0.8 percent increase in Italy’s banking index and bringing total gains since the stock first started trading to around 20 percent.

Shares in Banco BPM debuted on Jan. 2 and around 7 percent of the new bank’s capital changed hands this week amid growing demand for riskier assets and indications from analysts the lender may beat targets set under its business plan.

Gains posted by housebuilders and miners were, however, offset by European insurers, with the sector coming under pressure following a note from JP Morgan.

The European insurance index fell 0.5 percent, pressured by Hannover Rueck, which fell 2.2 percent after JP Morgan cut its price target for the stock and RSA Insurance fell 2.2 percent after the investment bank downgraded it to “neutral” from “overweight”.

“RSA was one of the best performing stocks in the Insurance sector in 2016 ... Since it has now reached our 585p target price, we move to Neutral. Our EPS estimates are essentially unchanged,” JP Morgan analysts said in a note.

The worst performer across the benchmark STOXX 600 index was Rolls Royce, which fell more than 3 percent following a price target cut by JP Morgan.

British retailer Next, which cut its profit forecast for the current financial year on Wednesday after a poor Christmas, fell another 1 percent, setting its shares up for the worst three-day loss in nearly two decades. (Reporting by Atul Prakash; Editing by Adrian Croft)

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