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FTSE hits fresh one-year high, RBS slumps

Published 05/08/2016, 15:51
© Reuters. People walk through the lobby of the London Stock Exchange in London
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By Kit Rees

LONDON (Reuters) - Britain's blue-chip share index climbed to its highest level since July 2015 on Friday, led by a rise in housebuilders and miners, although Royal Bank of Scotland slumped after reporting a big loss in its first-half results.

The blue chip FTSE 100 (FTSE) extended gains after better-than-expected U.S. jobs data and was trading 0.6 percent higher at 6,781.01 points by 1435 GMT. The mid-cap FTSE 250 (FTMC) also hit this year's high and was last quoted up 1.3 percent.

The market gathered momentum after the Bank of England cut rates for the first time since 2009 on Thursday and unleashed billions of pounds of stimulus to mitigate the economic impact of Britain's vote to leave the European Union.

"Today’s gains have been pretty much broad-based with the FTSE 250 breaking through 17,400 and its pre-Brexit peaks," said Michael Hewson, chief market analyst at CMC Markets.

"Also having a good day are housebuilders, with Persimmon , Berkeley Group and Barratt all up on the day. The new lower for longer interest rate environment is also likely to be helping."

Blue-chip Persimmon (L:PSN), Berkeley, Barratt Developments (L:BDEV) and Taylor Wimpey (L:TW) rose 1.5 to 3.2 percent.

Mid-cap brick maker Ibstock (L:IBST) soared 8 percent after reporting a set of well-received results, quelling fears about the impact of the UK's Brexit vote. Bellway (L:BWY) rose 5.1 percent on a strong set of results.

"Trading since the Brexit vote has been encouraging and with a strong balance sheet and robust land bank Bellway can be flexible and respond opportunistically to any changes in market conditions," Russ Mould, investment director at AJ Bell, said.

The UK mining index (FTNMX1770) rose 1.2 percent, tracking gains in some base metals. BHP Billiton (L:BLT) increased 2.7 percent, while Rio Tinto (L:RIO) was up 2.2 percent after the sale of its Mount Pleasant coal assets.

On the downside, Royal Bank of Scotland (L:RBS) slumped 8.5 percent, the worst performer in the FTSE 100 index, after its first-half losses widened and the part-nationalised bank abandoned its plans to turn its William & Glyn unit into a standalone bank.

"The outlook statement is notably cautious, reflecting increased uncertainty following the outcome of the EU referendum and lower for longer interest rate environment," Gary Greenwood, analyst at Shore Capital, said in a note.

Among other sharp movers, Hikma (L:HIK) advanced 8 percent, rebounding after a 16.8 percent slump in the previous session after issuing a profit warning on its generic drugs unit.

© Reuters. People walk through the lobby of the London Stock Exchange in London

The FTSE 100 has rallied around 7 percent since the UK's vote to leave the European Union, and the index is set to post a small gain for the first week of trading in August.

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