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US Debt Ceiling Helps FTSE 250 Edge Towards 13,000 Points

MONDAY MARKET UPDATE: The FTSE 100 hit its highest close since May 2008, while the FTSE 250 closed within a whisker of 13,000 points

Holly Cook 21 January, 2013 | 6:30PM

A solid start to the week saw the UK’s blue-chip index hit its highest close since May 2008 and the mid-cap index extend its record high to within a whisker of 13,000 points.

The FTSE 100 closed up 27 points or 0.4% at 6,181, while the FTSE 250 index added 49 points or 0.4% to settle at 12,995.

The main force of momentum came from Friday’s news that Republicans in the US House of Representatives will extend the debt ceiling for three months to allow the Senate to come up with a Budget for this fiscal year. Meanwhile, Wall Street remained closed for Martin Luther King Day and millions of North Americans tuned into Obama’s inauguration, round two.

In Europe, German state election in Lower Saxony provided some interest over the weekend. The vote is seen as a litmus test ahead of the September Federal elections, and this weekend saw Merkel’s CDU coalition lose to the Social Democrats and Green Party. “This is a big deal as it hands the opposition a timely majority in Germany’s state parliament in Hanover,” commented Kathleen Brooks of GAIN Capital. “Policy paralysis is not ideal for Merkel as she leads up to the September elections,” she added.

In London, insurers Admiral Group (ADM) and Aviva (AV.) led the FTSE 100 risers, up 4.9% and 2.4%, respectively, while banks Royal Bank of Scotland (RBS) and Standard Chartered (STAN) ticked up 2.3% and 0.5%. US debt ceiling news helped bolster the share prices of several companies with revenue share generated across the pond.

Utility providers and natural resources were also in demand, with National Grid (NG.) 1.7% higher and Randgold Resources (RRS) 1.6% firmer.

On the downside, FT and Penguin publisher Pearson (PSON) was the worst off, slipping 2.9% after cutting its guidance for 2012 earnings. The firm flagged a continuing tough outlook for the year ahead and said it now expects 2012 earnings per share, excluding some intangible items such as goodwill, to be around 84p a share, down from 84.9p previously forecast and against adjusted EPS of 86.5p in the prior year.

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About Author Holly Cook

Holly Cook  is Managing Editor of Morningstar.co.uk