FTSE100 heads higher as luxuries and diamonds sparkle

January 15, 2014 3:01 PM

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London’s blue chip index was heading higher as upbeat news from Burberry and an outbreak of mega M&A deals in the US encouraged buyers off the sidelines.

FTSE was 28 points to the good at 6,795 with interest boosted by a strong performance from US markets overnight.

Burberry () led the way as fans of the luxury goods giant lapped up its 14% sales growth in the period that included Christmas.

Strong growth in Asia was the reason for the sales growth with a shift to online also a feature.

Angela Ahrendts, who will step down as chief executive in the middle of the year, said that currency headwinds will get stronger but brokers were reassured that the Chinese market is not slowing as much as some had feared.

Not far behind was () as UBS decided the recent slide in its share price had gone far enough.

The Swiss broker believes the stock’s poor performance offers investors a cheap price to buy in, especially with a dividend yield of 4.1%.

An 80% share price rise is a distinct possibility, according to the broker, which also says the worst case scenario is a 10% fall. Today, the shares rose 58p, 4.6%, to 1,321p.

On the downside, Hargeaves Lansdown () was out of favour as it re-jigged fees for its customers in a move that was estimated will cost it £8mln in year one and £9mln in 2016. Brokers speculated on whether it might kick off a price war in the fund management business and sent the shares 4% lower to 1,449p.

There was some big news in diamonds with the whole sector getting a polish as Firestone () said it had raised funding of US$222mln (£140mln) to develop its Liqhobong mine in Lesotho.

Brokers said it was an impressive achievement for a company worth £30mln and that was after a 25% rise in the share price today. Analysts said geologists had always been impressed by Liqhobong’s potential, which has now been validated.

Other diamond miners basked in the praise for Firestone, with () up 22% at 1.16p as with good timing it put out an upbeat report on progress at its Tongo diamond project in Sierra Leone.

Cancer cell screening specialist Angle () was another on the rise, hitting 100p for the first time as investors warmed to news Monday that it would set up a dedicated laboratory at Cambridge University with the Medical Research Council. Shares have risen by about a quarter since the tie-up was revealed.

(), the oil company run by ex-BP chief Tony Hayward, expects to grow production by around 50% in 2014, in the range of 60,000 and 70,000 barrels per day as it pushes ahead with its active exploration and development programmes. Shares eased a little to 1,067p, but that is after a very good run last year.

West African Minerals () said its maiden inferred mineral resource estimate (MRE) for Binga clearly identifies the potential of the southwest Cameroon iron ore asset, helping its shares edge up to 9.88p.

Gold miner Anglo Asian (LON;AAZ) fell to 20.17p as it warned profits had been bit by the low gold price and processing issues.

() rose 4% to 13.1p on news it will drill ten wells for former parent (LON;GDG) in China.

Source: proactiveinvestors.co.uk

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