London shares close higher

AFP - Thursday, July 3 06:24 pm

LONDON (AFP) - Leading shares closed higher, after a volatile session, with banks bouncing from recent weakness and Wall Street gaining, despite disappointing economic data.

At the close Thursday, the FTSE 100 index was up 50.3 points at 5,476.6, having been up as much as 64.3 and down as much as 67.8 in the session. The FTSE 250 fell 1.8 points to close at 8,656.4.

As usual Vodafone was the most widely traded stock, seeing 220 million shares switch owners, followed by RBS, which saw 139 million units change hands.

The closing auction of the London Stock Exchange was extended to 5 p.m. due to a "backlog of data".

Wall Street rose after Wednesday's steep falls, but shares are still struggling to get out of bear market territory.

The Labor Department said employers cut 62,000 jobs in June. Economists predicted the number of jobs would fall by about 60,000, but investors appeared somewhat relieved the losses were not steeper.

Employment numbers are critical because consumers who are out of work, or who are nervous about losing their job, are likely to cut their spending.

A report on the service sector came in much weaker than expected.

The Institute for Supply Management says its index of June service sector activity fell to 48.2 from 51.7 in May.

Wall Street had expected the number would come in at 51. A reading below 50 signals contraction.

As the London markets were closing, the Dow Jones Industrial Average was 93.1 points higher at 11,308.6.

The S and P 500 was up 6.85 at 1,268.35. The Nasdaq Composite was 3.65 higher at 2,255.11.

Wall Street will close three hours early, at 6 p.m. BST, today, and will be closed on Friday, due to the Independence day holiday.

IG Index chief market strategist David Jones said, noting the volatility of the FTSE 100, said it had been a "rollercoaster" market on Thursday.

He added that, with the FTSE 100 continuing to just about hold above the lows for the year in the 5300 area but with the broader FTSE 250 and FTSE All Share indices already having set new 2008 lows, "you would have to be a committed optimist to feel that further weakness next week is going to be any sort of a surprise".

Banks were the biggest positive feature in the FTSE 100.

"The banking sector's performance has been aided by recent comments from UBS -- they said they don't need fund-raising for the time being," said Keith Bowman.

Royal Bank of Scotland was up 9 at 213 while HBOS topped the blue chip leaderboard, closing 18.25 pence -- or 7.57 percent -- higher at 280.25, above its 275 rights issue price.

Barclays was up 6.75 at 292.

Miners were mixed, with copper higher and gold lower.

Antofagasta was the second best performer on the day, up 36.5 pence -- or 6.51 percent -- at 605, and Eurasian Natural Resources was 14 higher at 1,079.

Lonmin fell 57 to 2,814; Ferrexpo was 10.5 lower at 332.5; Rio Tinto fell 51 to close at 5,460.

Oil services company Amec rose 24.5 to 874 after it raised its EBITA margin expectation for 2008 to 6.5 percent, leading Seymour Pierce to upgrade the stock to 'hold' from 'sell' and raise estimates.

BAE Systems rose 11.75 to close at 438.5 after its joint venture with VT Group was awarded long-awaited contracts to build two new aircraft carriers for the Royal Navy worth around 3 billion pounds.

Cazenove upgraded its earnings forecasts for 2008 and 2009 and kept its 'outperform' rating on the group.

Midcap VT closed up 17.5 at 631.

Pharmaceutical giants AstraZeneca and GlaxoSmithKline also continued to attract buyers, taking on 81 at 2,314 and 35 at 1,181, respectively, after Wednesday's encouraging news regarding AstraZeneca's Seroquel drug.

Brokers moved to raise price targets for the stock Thursday, with Credit Suisse and ING both upping AstraZeneca's target to 2,300 pence.

On the downside, retailers remained out of favour following Marks & Spencer's warning on future sales, and after Goldman Sachs downgraded the group to 'neutral' from 'buy' and Investec cut its stance to 'hold' from 'buy'.

M and S fell 4 to 236, while Sainsbury was the worst blue-chip performer, falling 10 pence -- or 3.45 percent -- to 280, and Kingfisher eased 1.6 to 100.

Sage Group was the day's second worst performer, sliding 6.3 pence -- or 3.45 percent -- to 191.2.

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