London open: Stocks rise on Greek optimism

17th Feb 2012 08:24

- Footsie rises as Greek optimism boosts buying.- Resources stocks track commodities prices higher.- Record underlying earnings for Anglo American.London's blue chips recovered after yesterday's fall with the Footsie rising strongly in early trading on Friday on reports of measures by European leaders to prevent Greece defaulting on its debts. Resource stocks and banks were performing well in the opening hour.The latest reports are pointing to the confirmation of the European Central Bank's (ECB's) participation in the debt swap and an increased control over the bailout by Eurozone officials. The ECB seems to have finally agreed to forgo profits on the Greek bonds that it had bought at a discount. According to an e-mail interview with Reuters, the president of the Bundesbank, Jörg Asmussen, confirmed that this was the monetary authority's intention. Though it's not quite clear how the process would go through, experts expect the ECB Greek debt holdings to be purchased by the European Financial Stability Facility(EFSF) bailout fund.With regard to an iron-clad control of Greek finances, there is market talk of the creation of an escrow account to better to control the aid. Speculation is that the account would hold nine to 12 months of public financing needs. In theory, this process would assure that funds go to servicing the debt instead of getting taken up by general expenditure. The Financial Times also reports that "the new bailout will include a permanent and beefed-up presence of international monitors who will attempt to keep real-time tabs on the Greek government's spending decisions."RESOURCES STOCKS ON THE RISEWith Brent crude prices surpassing the $120-a-barrel mark, oil-related stocks were performing strongly with Tullow Oil, Petrofac and IMI on the rise. Yesterday's stronger-than-expected US economic data and an improving outlook for Greece has helped the outlook for demand. IMI announced this morning that it had spent £22m in cash on buying Brazilian isolation valve business Grupo InterAtiva, which is expected to provide a "strong platform for IMI's existing severe service isolation valve brands."Meanwhile, the miners were in demand as metals prices rose. The value of gold in particular was being helped by billionaire hedge-fund tycoon John Paulson who has said that now is the time to buy: "by the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold," he said in a letter seen by Bloomberg. Randgold Resources was a high riser, while sector peers Xstrata, Vedanta Resources and Kazakhmys followed suit.Anglo American rose after notching up record underlying earnings in 2011. Group revenue including associate companies climbed 11% to $36.5bn from $32.9bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) also moved up 11% to a record level of $13.3bn from $12.0bn. Banking peers Royal Bank of Scotland, Barclays and Lloyds were making solid gains while financial peers Schroders, Ashmore and Hargreaves Lansdown were leading the downside.Water supplier Severn Trent fell after saying that full-year consumption levels across its measured income base are expected to be lower than last year, in line with the trend seen in the first half. Nevertheless, the firm said that no new material trading events or transactions have occurred since the end of the first half, and that trading has been in line with expectations. On the FTSE 250, instrumentation and controls group Spectris rose strongly after adjusted pre-tax profit rose 45% to £191.6m in 2011, while sales broker through the billion pounds barrier,p 23% year-on-year.BCFTSE 100 - RisersRoyal Bank of Scotland Group (RBS) 27.74p +3.70%Randgold Resources Ltd. (RRS) 7,190.00p +3.01%Tullow Oil (TLW) 1,578.00p +2.80%CRH (CRH) 1,304.00p +2.19%Vedanta Resources (VED) 1,282.00p +2.15%Evraz (EVR) 428.80p +1.90%IMI (IMI) 943.50p +1.83%Kazakhmys (KAZ) 1,139.00p +1.79%Lloyds Banking Group (LLOY) 34.97p +1.70%Weir Group (WEIR) 2,002.00p +1.68%FTSE 100 - FallersAshmore Group (ASHM) 388.60p -2.39%Schroders (SDR) 1,523.00p -1.87%Schroders (Non-Voting) (SDRC) 1,240.00p -0.96%ITV (ITV) 76.85p -0.84%SABMiller (SAB) 2,531.50p -0.82%Severn Trent (SVT) 1,528.00p -0.78%United Utilities Group (UU.) 601.50p -0.74%Next (NXT) 2,759.00p -0.72%British American Tobacco (BATS) 3,125.50p -0.71%GlaxoSmithKline (GSK) 1,412.50p -0.70%FTSE 250 - RisersNew World Resources A Shares (NWR) 508.00p +3.13%Talvivaara Mining Company (TALV) 290.60p +3.09%Berkeley Group Holdings (The) (BKG) 1,355.00p +2.96%Petropavlovsk (POG) 699.50p +2.87%Northgate (NTG) 243.80p +2.87%Galliford Try (GFRD) 513.00p +2.70%Premier Farnell (PFL) 220.00p +2.47%Hansteen Holdings (HSTN) 74.95p +2.39%Spectris (SXS) 1,698.00p +2.29%Phoenix Group Holdings (DI) (PHNX) 575.00p +2.22%FTSE 250 - FallersPerform Group (PER) 265.40p -4.19%Barratt Developments (BDEV) 120.20p -2.04%BH Global Ltd. USD Shares (BHGU) 11.66 -2.02%Big Yellow Group (BYG) 293.20p -1.38%Savills (SVS) 352.60p -1.37%Jardine Lloyd Thompson Group (JLT) 654.50p -1.21%Brown (N.) Group (BWNG) 249.70p -1.15%Greggs (GRG) 529.50p -1.03%Domino's Pizza UK & IRL (DOM) 484.30p -1.00%Kier Group (KIE) 1,418.00p -0.98%