London close: Fed will not ‘taper’ in 2013, Barclays says

London stocks finished the last trading day of the month in negative territory despite the release of mostly better than expected economic data Stateside in the afternoon.

The exception was the April personal consumption figures, which revealed the first drop in spending by Americans in a year. However, that report may have a ‘silver lining’ as the price index contained in the same – the so-called PCE price index – dropped to a 0.7% year-on-year rate of advance, versus 1.0% in the month before.

Economists at Barclays Research told clients that: “Overall, we view the slowing in consumer spending and GDP growth in Q2 13, and the soft inflation readings, as consistent with our view that the FOMC will not taper the pace of asset purchases this year, although that decision will likely depend most closely on upcoming labor market reports.”

On a more negative note, the Eurozone unemployment rate rose from 12.1% to a record 12.2% in April. That followed downwards revisions to Eurozone growth forecasts by the OECD earlier this week.

Also acting as a backdrop, there was a fair amount of speculation in markets on Friday regarding the risk that tomorrow’s Chinese manufacturing data could well come in below economists’ expectations.

FTSE 100: Investors still willing to bet on corporate debt

William Hill led gains on the benchmark after managing to get off a corporate bond sale to institutional investors to raise about £375m to help repay loans on acquisitions. That came despite the volatile conditions in debt markets of late.

UK banking group Lloyds also ended higher after selling a portfolio of US residential mortgage backed securities for £3.3bn as it continues to dispose of non-core assets to boost capital. The portfolio has a book value of £2.7bn so the bank will pocket a gain of £540m before tax on the sale which will be used for “general corporate purposes”.

RBS bucked the trend to end the day with moderate gains.

Utilities stocks were on the up, rebounding after their recent falls. Severn Trent, National Grid and Centrica were in demand.

Engineering firm Smiths Group dropped despite an earlier stint in the blue, after confirming rumours that it has received a preliminary approach for its medical division. Market reports suggested that the unit could fetch at least £2.0bn.

Tour operator TUI Travel fell after committing to spend $6.1bn on 60 new aircraft with the option to acquire the same amount again at the same price.

B&Q owner Kingfisher was also in the red, pulling back after its strong rise yesterday following its first-quarter trading update. The recent wet weather in the UK led to profits coming in below estimates but Credit Suisse said yesterday that it doesn’t see material risk to full-year forecasts.

FTSE 250: Lonmin and Halfords on the rise

Platinum miner Lonmin was an outperformer for much of the session as negotiations continued with labour unions in South Africa. The stock was given a boost by Morgan Stanley, which upgraded its rating from ‘equal weight’ to ‘overweight’, saying that the stock appears attractively valued versus peers.

Car and bike parts retailer Halfords was a strong riser on the FTSE 250 after UBS raised its recommendation for the stock by two notches from ‘sell’ to ‘buy’ and hiked its target price from 280p to 375p. “Halfords is a brand with high market share in its core markets, good resonance with consumers, and finally is undertaking some of the investment required to succeed as a specialist retailer,” the broker said.

FTSE 100 – Risers

William Hill (WMH) 442.70p +1.82%

Admiral Group (ADM) 1,338.00p +1.59%

Royal Bank of Scotland Group (RBS) 336.60p +1.54%

Centrica (CNA) 380.00p +1.06%

Whitbread (WTB) 2,883.00p +0.59%

Lloyds Banking Group (LLOY) 62.11p +0.50%

Hammerson (HMSO) 513.00p +0.39%

Wood Group (John) (WG.) 851.50p +0.29%

Shire Plc (SHP) 2,170.00p +0.28%

Tullow Oil (TLW) 1,045.00p +0.19%

FTSE 100 – Fallers

Evraz (EVR) 135.30p -4.92%

Eurasian Natural Resources Corp. (ENRC) 239.90p -4.76%

Capita (CPI) 962.00p -3.61%

Vedanta Resources (VED) 1,262.00p -3.37%

Experian (EXPN) 1,222.00p -3.25%

Legal & General Group (LGEN) 179.00p -3.19%

WPP (WPP) 1,128.00p -3.18%

Glencore Xstrata (GLEN) 323.10p -3.07%

Prudential (PRU) 1,117.00p -3.04%

Associated British Foods (ABF) 1,812.00p -2.74%

FTSE 250 – Risers

Halfords Group (HFD) 329.00p +6.13%

Oxford Instruments (OXIG) 1,683.00p +3.25%

Synthomer (SYNT) 204.50p +3.07%

Travis Perkins (TPK) 1,611.00p +2.81%

Lonmin (LMI) 295.00p +2.79%

Lancashire Holdings (LRE) 795.50p +2.71%

Direct Line Insurance Group (DLG) 212.00p +2.22%

BTG (BTG) 359.50p +1.99%

Keller Group (KLR) 948.00p +1.99%

Petropavlovsk (POG) 137.90p +1.85%

FTSE 250 – Fallers

Man Group (EMG) 115.50p -5.41%

Imagination Technologies Group (IMG) 351.40p -4.51%

Afren (AFR) 131.20p -4.23%

Mondi (MNDI) 871.50p -3.38%

Kazakhmys (KAZ) 327.50p -3.22%

Balfour Beatty (BBY) 233.10p -3.16%

Howden Joinery Group (HWDN) 234.20p -3.06%

Halma (HLMA) 517.00p -2.73%

Premier Oil (PMO) 359.90p -2.65%

Cobham (COB) 285.80p -2.59%

FTSE TechMARK – Risers

Promethean World (PRW) 16.38p +7.38%

Kofax (KFX) 330.00p +1.54%

Emblaze Ltd. (BLZ) 50.75p +1.50%

NCC Group (NCC) 110.00p +1.38%

E2V Technologies (E2V) 127.12p +1.09%

Innovation Group (TIG) 27.50p +0.92%

Phoenix IT Group (PNX) 152.38p +0.91%

Skyepharma (SKP) 50.00p +0.76%

BATM Advanced Communications Ltd. (BVC) 20.50p +0.61%

CML Microsystems (CML) 436.50p +0.34%

FTSE TechMARK – Fallers

RM (RM.) 68.75p -4.35%

Ark Therapeutics Group (AKT) 0.41p -3.53%

Antisoma (ASM) 1.68p -1.47%

Sepura (SEPU) 116.50p -1.27%

Ricardo (RCDO) 404.00p -1.22%

Optos (OPTS) 126.38p -0.88%

Xaar (XAR) 652.00p -0.15%

Triad Group (TRD) 6.50p 0.00%

Parity Group (PTY) 30.00p 0.00%

Torotrak (TRK) 30.12p 0.00%

AB

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