London midday: German ZEW survey provides a boost to UK stocks

14th Feb 2012 11:48

- German ZEW expectations index swings into positive territory.- Moody's downgrades six nations, cuts outlook for three others to negative.- Bunzl, Barclays higher after broker upgrades.After an initial slump on the back of a mass downgrade of European sovereigns by Moody's, a sharp rise was recorded in mid-morning trade following an unexpected surge in a German sentiment survey.Ratings agency Moody's Investors Service last night downgraded six European sovereigns, Italy, Malta, Portugal, Slovakia, Slovenia and Spain, "in order to reflect their susceptibility to the growing financial and macroeconomic risks emanating from the euro area crisis and how these risks exacerbate the affected countries' own specific challenges," Moody's said. Moody's also revised its outlook on the Aaa ratings of the UK, Austria and France to negative. "The negative outlooks reflect the presence of a number of specific credit pressures that would exacerbate the susceptibility of these sovereigns' balance sheets, and of their ongoing austerity programmes, to any further deterioration in European economic conditions and financial landscape," the statement said. Meanwhile, the German ZEW investor sentiment survey came in well ahead of expectations, sending bourses across Europe into positive territory. The ZEW expectations index increased by 27 points to 5.4 points in February, up from -21.6 last month, smashing forecasts of a -11.6 reading. This is the first time the index has been in positive territory since May 2011. "The further increase of economic sentiment indicates that the recent slowdown in economic growth isn't likely to last in the view of the surveyed financial market experts," ZEW said.In domestic news, the consumer price index (CPI) inflation fell to 3.6% in January, according to Office for National Statistics, matching forecasts. The fall in the year-on-year rate of change in the CPI follows that seen last month, when it retreated to a year-on-year rate of 4.2%, from 4.8% the month before. The two month drop in prices is thus the largest since November 2008.BUNZL, BARCLAYS UP AFTER UPGRADESDistribution and outsourcing firm Bunzl was the top of the risers list by midday after JP Morgan upped its recommendation from neutral to overweight on valuation grounds. "We believe that the recent relative underperformance could be a good entry point ahead of FY results on 27 February," the US broker said.Meanwhile, UK lender Barclays was also on the rise after Exane BNP Paribas upgraded the stock from neutral to outperform and Shore Capital upgraded its rating from sell to neutral. UBS, meanwhile, raised its target price by 21% but maintained a neutral rating. Sector peers RBS and Lloyds were not performing so well, with both stocks firmly in the red.Miners were out of favour, with Rio Tinto, Vedanta Resources and Anglo American among the worst performers. BHP Billiton and Rio both approved a major investment to ramp up production at the Escondida copper project in Chile worth over $4.5bn, it was announced this morning. BHP also announced a 17% increase in the mineral resources and a 25% increase in the ore reserves at Escondida following successful brownfield exploration and accelerated in-fill development drilling programmes. MONDI LEADS THE RISE ON THE FTSE 250 Paper and packaging group Mondi was in demand after saying underlying profit for the fourth quarter of 2011 is expected to be on a par with the corresponding quarter of 2010. Specialist healthcare firm BTG nudged higher after it announced that Chief Financial Officer Rolf Soderstrom has decided to stay put and will no longer leave the company at the end of its fiscal year. Water group Pennon edged higher after saying its overall financial performance since September 30th 2011 remains on track to meet management expectations after progress across all of its divisions.Rotork was suffering from a downgrade by UBS from buy to neutral, with the broker saying that the engineer's current share price "looks about right in our view and a blue skies scenario does not tempt us either."BCFTSE 100 - RisersBunzl (BNZL) 907.50p +3.36%Man Group (EMG) 134.30p +2.36%BAE Systems (BA.) 327.10p +2.22%Capita (CPI) 648.00p +2.13%Meggitt (MGGT) 372.50p +2.05%Burberry Group (BRBY) 1,420.00p +1.94%Wolseley (WOS) 2,360.00p +1.81%Eurasian Natural Resources Corp. (ENRC) 712.50p +1.50%United Utilities Group (UU.) 605.50p +1.34%Royal Dutch Shell 'A' (RDSA) 2,321.50p +1.09%FTSE 100 - FallersRio Tinto (RIO) 3,760.50p -2.21%Royal Bank of Scotland Group (RBS) 27.57p -1.89%Vedanta Resources (VED) 1,263.00p -1.48%Schroders (Non-Voting) (SDRC) 1,266.00p -1.25%Anglo American (AAL) 2,782.00p -1.24%Serco Group (SRP) 525.00p -1.22%Xstrata (XTA) 1,198.50p -1.20%Schroders (SDR) 1,583.00p -1.19%Glencore International (GLEN) 425.05p -0.98%Lloyds Banking Group (LLOY) 35.02p -0.79%FTSE 250 - RisersMondi (MNDI) 565.00p +5.41%Misys (MSY) 303.00p +4.37%Carpetright (CPR) 603.00p +4.33%Spirit Pub Company (SPRT) 57.50p +3.60%Genus (GNS) 1,099.00p +3.29%Perform Group (PER) 266.90p +3.25%Kesa Electricals (KESA) 84.80p +3.16%Invensys (ISYS) 218.50p +2.97%Barratt Developments (BDEV) 124.70p +2.38%Redrow (RDW) 132.00p +2.25%FTSE 250 - FallersCable & Wireless Worldwide (CW.) 27.09p -5.08%Howden Joinery Group (HWDN) 111.20p -3.47%Aquarius Platinum Ltd. (AQP) 144.20p -3.42%Galliford Try (GFRD) 501.50p -2.05%Hochschild Mining (HOC) 508.00p -1.84%Kenmare Resources (KMR) 57.45p -1.79%Fidessa Group (FDSA) 1,587.00p -1.79%Rentokil Initial (RTO) 75.55p -1.63%Centamin (DI) (CEY) 95.60p -1.54%Rotork (ROR) 1,944.00p -1.52%