FTSE Ends Its Losing Streak

The equity markets finally broke their nine-day losing run to end the week on a higher note

Morningstar.co.uk Editors 25 November, 2011 | 5:26PM
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The rise may not be dramatic, but it does suggest that are at least a few buyers still out there to support the market.

The FTSE 100 rose 0.7% to 5,164 in spite of continued political intransigence in the Eurozone. Bond investors remained unimpressed by the news that leaders were negotiating for closer fiscal union. Italian debt yields surged higher after a weak debt auction. The government managed to raise the full £100bn as planned, but at higher rates. The market is still waiting for new Prime Minister Mario Monti to announce his plans for deficit reduction.

There was relatively little corporate news to distract markets and trading was thin at the start of the US thanksgiving weekend. What little news there was firmly focused on the retailers, as ‘Black Friday’ – the start of the US pre-Christmas shopping season - began in earnest.

Blacks Leisure was the latest victim of the lacklustre high street, as it announced that full year profits would be below expectations and it would need to secure additional funding to ‘execute its strategic plans’. The shares slipped 11.4% to 3.9p. The news dragged down a number of similar retailers with shares in JD Sports another big loser on the day.

Thomas Cook’s shares consolidated yesterday’s strong rise with another 10% gain as markets grew increasingly confident that the group would be able to renegotiate its debt. Dixons also had another strong day’s trading.

On the FTSE 100, the banks led the index higher. Joshua Raymond, chief market strategist at City Index said: "Shares in Royal Bank of Scotland and Lloyds Banking Group led UK stocks higher in trading, with both bank share prices rallying between 2% and 4% on the day. Both stocks have lost around 40% in value over the last four weeks alone and so naturally the sharp falls has attracted bargain hunters hoping to benefit from any short term rally that may come. This was enough to lift both banks share prices today.

Banks and insurance companies also benefited from speculation that members from eurozone states were discussing dropping Private Sector Involvement clauses from the European Stability Mechanism (ESM), the bailout fund.

The miners were the FTSE 100’s weakest area with Vedanta Resources and Fresnillo all among the top ten fallers.

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