Shares lifted by liquidity move in China, bid talk and positive results from Unilever
Leading shares are heading towards their highest level since the dotcom boom amid a mixed set of trading updates and a spate of takeover speculation.
The FTSE 100 is currently up 9.15 points at 6845.88 - if it closes at this level it will beat the most recent peak on 22 May last year and be the highest since the record close of 6930 on 30 December 1999. News overnight that the People's Bank of China had injected liquidity into the system helped calm fears of a credit crunch in the country. Brenda Kelly, chief market strategist at IG, said:
Any waning momentum felt in European indices yesterday has been offset by monetary intervention from the People's Bank of China this morning. An emerging credit crunch in the world's second-biggest economy has become one of the more prominent event risks over the past year. For now, the Chinese authorities appear to be stemming investor concerns.
Even news from Fed-watcher Hilsenrath, that the FOMC is likely to continue to shave its asset-purchase programme by an additional $10 billion per month, does not seem to have fazed the bulls.
Unilever is leading the way, up 89p at £25.26 following well received results, but SABMiller has lost 30p to £30.64 as weaker beer volumes led to disappointing third quarter sales.
Back with the risers, testing group Intertek is 89p higher at £29.97, lifted by a positive update from Swiss peer SGS, which reported rising profits and said it expected revenues to grow over the next three years.
Elsewhere Standard Chartered has added 35.5p to 1363.5p on renewed talk its recent share price weakness could leave it vulnerable to a bidder, with Australia's ANZ the latest name added to the list.
William Hill has fallen 4p to 358p and rival Ladbrokes 4.3p to 162.4p after JP Morgan cut its price target on both and gave them an underweight rating, based on possible restrictions on gaming machines in betting shops as early as spring or autumn this year. The bank said:
Prior to the House of Commons debate on regulatory restrictions on gaming machines on 8 Jan, our initial analysis suggested significant risk to forecasts. After the debate, we think that some restrictions are likely. More detailed analysis of the potential impact suggests significant risk for Ladbrokes (39% downside to our 2015 earnings per share forecast), and some risk for William Hill (13% downside), if even modest restrictions were imposed on the machines.
Significant shop closures could be required, as we think the bottom 20% of shops could be made lossmaking. We remain underweight on Ladbrokes (price target 95p from 140p) and William Hill (price target 340p from 360p), on the increasing regulatory risk in UK retail but also intensifying competition in online.
Mining companies slipped back on profit taking after recent rises despite the banking news from China, a key consumer of commodities. Rio Tinto dipped 56.5p to 3279.5p while BHP Billiton has lost 20p to 1866.5p.
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