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Positive earnings halt fall on FTSE

Markets didn’t take long to decide that downgrades for Greece and Portugal weren't such a big problem after all and the FTSE 100 slid just 17 points to 5,587 on Wednesday.

Morningstar 28 April, 2010 | 5:32PM

After yesterday’s rout, these signs of stabilisation were welcomed. The markets were buoyed by both some strong earnings data and a positive start from Wall Street.

Gartmore Group was the day’s biggest riser, up 15.5% to 164p on news that star fund manager Guillaume Rambourg has returned to the fold after his suspension for breaking internal procedures. The manager will initially return as an investment analyst, but will resume fund management duties providing FSA approval is granted.

Shares in Royal Dutch Shell also had a strong day’s trading as it posted a 60% rise in adjusted profit for the first quarter due to higher oil prices and faster growth in output. Earnings rose 49% to $4.9bn. The price rose 2.5% to 1,969p and gave a strong boost to a lacklustre FTSE.

Shares in British American Tobacco (BAT) fell 1.5% to 2,109p in spite of announcing first quarter volumes in line with expectations. The group maintained market share, but volumes fell along with the overall market. Unemployment and excise duties had put pressure on some of the group’s key markets, which spooked investors.

Home Retail Group improved its cash pile by £130m, in spite of weaker like-for-like sales at key brand Argos. The group plans to use up to £150m of it to fund a share buy-back, but is also upping its capital expenditure for the next fiscal year. The shares fell 1.4% to 277.1p.

Rolls Royce shares slid 2.4% to 576p after chief executive John Rose said that the overall environment remained ‘challenging’ with some of its customers hit by the volcanic eruption in Iceland. He added that the group was seeing signs of stabilisation and improvement in some parts of the global economy to which its businesses are exposed, but full year profits would be flat. Trading profit was in line with expectations.

Carpetright was one of the day’s biggest fallers as sales in its most recent 12 weeks' trading showed growth momentum slowing. The 1.5% gain fell short of the group’s internal expectations and demonstrated that the worst may not yet be over for the group. Chief executive Philip Harris said the tax rises promised by all three political parties did not bode well for sales in the remainder of 2010 either.

Shares in industrial engineering group Fenner also slipped 7% to 210p as it raised £36.3m in a share sale. It plans to use the cash to fund three small but strategic acquisitions after it reported a sharp rise in first-half fiscal-year profit.

Gambling company 888 Holdings was the other big casualty of the day. It said it would have to cut costs to offset a disappointing start to the second quarter of the year. The group is now being mooted as a takeover target, but this did not help the shares, which were down 13% to 81.7p.

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