London close: FTSE 100 finishes strongly on 'fiscal cliff' optimism

18th Dec 2012 16:55

- US budget negotiations lift hopes- G4S up on renewed confidence- FTSE 250 at all-time highUK markets finished with strong gains on Tuesday afternoon as 'fiscal cliff' hopes spurred investors' appetites for riskier assets, such as mining stocks.The second-tier FTSE 250 index was trading at a record high today, while Frankfurt's DAX was close to its best levels since 2008. However, as financial sales trader Toby Morris from CMC Markets pointed out this afternoon, "the FTSE 100 has once again underperformed finding progress above its recent highs somewhat problematic".Eyes were kept firmly on budget negotiations Stateside today after President Barack Obama last night proposed raising taxes for those that earn over $400,000, a higher threshold than the $250,000 annual salary he had previously targeted.Meanwhile, House Speaker John Boehner said that he is working on a "plan B" to "protect as many American taxpayers as we can". Under his new plan, tax increases will only be imposed on those earning over $1m a year."Markets feel that after days of slow progress, we are finally seeing a step-up in the pace of budget negotiations," said market strategist Ishaq Siddiqi from ETX Capital. "Much work remains for US lawmakers however, who will have to endorse proposals but the last two days provides the market with a degree of confidence that we are seeing some constructive dialogue in Washington."Economic news elsewhere was thin on the ground today, with Spanish and Greek bond auctions going smoothly and UK consumer price inflation staying unchanged at 2.7% in November.FTSE 100: G4S and the miners provide a boostSecurity solutions group G4S was a high riser after the Department of Work and Pensions confirmed that it was among six companies on its list of potential bidders for welfare-benefit call-centre contracts worth £150m over four years. Seymour Pierce analyst Caroline de la Soujeole said that this "puts to bed any idea that the government is having cold feet on outsourcing following G4S's Olympic problems". Other potential bidders include Serco and Capita. The stock was upgraded this morning by Panmure Gordon from 'hold' to 'buy'.Mining stocks were performing well today, tracking commodities prices higher on hopes that the US economy can avert the 'fiscal cliff'. Vedanta, EVRAZ and Rio Tinto were among the best performers. However, Kazakhmys was bucking the red after Deutsche Bank downgraded its rating on the stock to 'hold' and cut its target price from 1,066p to 746p. Temporary power and temperature control group Aggreko rose, shrugging off a downgrade by Espirito Santo (to 'neutral') and several target price cuts from other brokers (including JP Morgan Cazenove, Morgan Stanley and UBS), as it attempts to rebound after yesterday's steep falls. The stock finished yesterday's session down 22% after warning that revenues in 2013 would likely be lower than this year. The shares rose just 2% today.Oilfield services giant Petrofac was lower despite reiterating its target of achieving net profit growth of at least 15% this year, saying that operations continue to perform in line with expectations. Whitbread gained after saying that it has raised £51.04m from the sale and leaseback of seven Premier Inns and joint-site restaurants. The price represents a profit over book value of £19.6m. Engineering group Rolls-Royce rose after signing a $1bn contract, at list prices, with Japan's Skymark Airlines for Trent 900 engines to power six Airbus A380 aircraft.FTSE 250: New World surges on coal demand hopes Central Europe-focused hard coal and coke producer New World Resources jumped after the International Energy Agency (IEA) said that coal will come close to surpassing oil as the world's top energy source by 2017.Despite the upbeat outlook for coal, oil stocks were in demand as crude prices. Heritage Oil and Essar Energy were making gains, with the former lifted after saying that it has acquired 1.9m shares in Toronto-listed peer PetroFrontier, taking its stake to nearly 20%.Insurance groups Hiscox and Catlin were lower after revealing their estimates for the impact of Superstorm Sandy. Hiscox estimates net claims of around £90m, while Catlin predicts Sandy-related losses of $200m. Sector peer Beazley, which last week estimated its losses at $90m, was also lower today.Support services and construction group Interserve gained after acquiring Advantage Healthcare from Rutland Partners and management for a cash consideration of £26.5m. Egyptian gold miner Centamin continued to rise after saying yesterday that gold exports had resumed at its flagship Sukari mine. Investors are now waiting for mining operations to restart at the project following last week's suspension.FTSE 100 - RisersRio Tinto (RIO) 3,568.00p +2.82%G4S (GFS) 257.00p +2.68%Pearson (PSON) 1,205.00p +2.55%Vedanta Resources (VED) 1,143.00p +2.51%Carnival (CCL) 2,532.00p +2.47%Aggreko (AGK) 1,704.00p +2.40%Rolls-Royce Holdings (RR.) 880.00p +2.39%BAE Systems (BA.) 346.00p +2.22%Capita (CPI) 771.50p +2.19%Anglo American (AAL) 1,894.50p +2.05%FTSE 100 - FallersVodafone Group (VOD) 156.25p -1.23%Petrofac Ltd. (PFC) 1,661.00p -1.13%Randgold Resources Ltd. (RRS) 6,150.00p -1.13%Hargreaves Lansdown (HL.) 694.00p -0.72%United Utilities Group (UU.) 699.50p -0.71%Kazakhmys (KAZ) 777.00p -0.70%Rexam (REX) 440.00p -0.61%British American Tobacco (BATS) 3,176.00p -0.56%British Sky Broadcasting Group (BSY) 762.00p -0.52%Wolseley (WOS) 2,796.00p -0.46%FTSE 250 - RisersNew World Resources A Shares (NWR) 290.00p +10.02%Imagination Technologies Group (IMG) 410.90p +7.14%FirstGroup (FGP) 200.70p +5.30%Heritage Oil (HOIL) 185.60p +5.16%Ocado Group (OCDO) 81.15p +4.71%IP Group (IPO) 111.00p +4.23%Shanks Group (SKS) 85.25p +3.40%Ashtead Group (AHT) 425.40p +3.25%Electrocomponents (ECM) 231.00p +3.17%Afren (AFR) 131.60p +3.05%FTSE 250 - FallersRenishaw (RSW) 1,860.00p -2.77%Kentz Corporation Ltd. (KENZ) 388.30p -2.56%Ruspetro (RPO) 76.70p -2.11%NMC Health (NMC) 175.00p -1.96%Petra Diamonds Ltd.(DI) (PDL) 105.90p -1.94%Domino's Pizza Group (DOM) 491.30p -1.94%Synthomer (SYNT) 182.50p -1.72%Catlin Group Ltd. (CGL) 489.10p -1.63%BH Macro Ltd. EUR Shares (BHME) € 18.95 -1.30%Daejan Holdings (DJAN) 3,001.00p -1.28%BC