London market continues on road to recovery - Summary
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Tue, 14 Oct 2008 13:41
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London - The recovery of the London stock market continued for a second day Tuesday as coordinated European and US efforts to stabilize the financial sector pushed the Financial Times Share Index (Footsie) higher, analysts said. The Footsie was up by 255.7 points, or 6.5 per cent, to reach 4,512.6 points by lunchtime, but the shares of leading banks remained volatile after the bailout plans announced Monday. However, later the Footsie's gain fell back to around 2.2 per cent, with the London index closing up 137.3 points at 4,394.2 points. Barclays' was among the main winners with a rise in its share price of 14 per cent to 246 pence, followed by Royal Bank of Scotland which saw its share price go up by 7 per cent following a government cash injection pledge of 20 billion pounds (35 billion dollars). However, Lloyds TSB, and Halifax Bank of Scotland (HBOS), were both down sharply as investors' doubts lingered over their proposed merger. Lloyds TSB was the day's biggest loser, with shares falling by more than 10 per cent to 151.3 pence. HBOS's shares fell by 5 per cent to 85.3 pence. Energy firms like BP and Royal Dutch Shell were also big winners as the oil price ticked up a few dollars. Angus Rigby, chief executive of Leeds-based broker TD Waterhouse, said: "A lot of people think this is an opportunity to get back in or enter the market. I think we are starting to get confidence that the bottom is nigh. I think it will still be volatile as the mechanisms of these various packages are worked through."Richard Hunter, head of equities at broker Hargreaves Lansdown, said: "After the relief rally all eyes are going to be on the medium- term outlook and the fact that most people think that 2009 is going to be very difficult indeed."Justin Urquhart Stewart, a director of Seven Investment Management, warned amateur investors to expect further volatility. "These are erratic and dangerous times. Inflation is high, the global economy is slowing and the banking crisis is still around. If you make a profit on short-term investments, then bank it," he said.
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