Market Report: Insurers boost top tier despite news from Japan

The top-tier index was covered in blue last night as it finally managed to bring to an end a run of six straight sessions of falls. The challenge for investors, however, was to separate the stocks that were over-sold after the tragedy in Japan from those merely experiencing a dead cat bounce.

Events in the country have played their part in the FTSE 100 losing over 6 per cent in that period, but yesterday it managed a surge of 97.88 points to close at 5,696.11. The insurance groups were some of those looking notably stronger, including Aviva which increased 15.8p to 437p.

The sector found support from Shore Capital, with its analyst Eamonn Flanagan saying that "at this early stage, we remain unconvinced that the losses from the Sendai quake will be sufficient in themselves to represent a 'market-changing' event" for the worldwide insurance market.

He expressed his surprise at RSA Insurance's weakness "given its lack of exposures" as it added 1.5p to 129.9p, and also said Beazley - 2.7p ahead at 120.7p - was one of the groups oversold.

There were words of encouragement as well from Morgan Stanley, and its analyst Maciej Wasilewicz said he believed "the market is implying a worst-case scenario level of large losses for [the] European reinsurers".

Claiming the set-up of the Japanese market – where "foreign reinsurers tend to have little or no nuclear or residential exposure, due to regulation and industry practice" – meant the sector's losses would be limited, he was especially positive on Lancashire and Amlin, which went on to jump up 36p to 568.5p and 13.3p to 398.6p respectively.

Also moving ahead were the mining stocks, including BHP Billiton which was driven up 67.5p to 2,281p. The world's largest miner was chosen by Barclays Capital as one of the "high- quality European stocks" it sees as having been hit by investors' cutting their risk, despite Japan contributing only 10 per cent of the group's revenue.

The broker picked out Whitbread as well, pointing out it "has no direct or indirect exposure to Japan unless this has a knock-on effect to the UK economy", and the Premier Inn and Costa Coffee-owner was boosted up 40p to 1,621p.

Another name highlighted was International Consolidated Airlines, and it shifted forwards 5.5p to 218.4p despite a sharp advance in the price of oil as the ongoing unrest in the Middle East and North Africa continued to worry.

Also looking good was Burberry, with the upmarket clothing retailer rising 14p to 1,108.p after losing nearly 9 per cent of its share price in the previous five sessions. H2O Market's Daniel Harris said the luxury sector had moved disproportionately lower given the fact "Japan represents 11 per cent of global luxury sales and most of the luxury groups have exposure to emerging nations, particularly China."

Yet this was enough for Deutsche Bank to downgrade its annual growth forecasts for the sector to just 2 per cent from 9 per cent, although it reduced its earnings estimates for Burberry by only 5 per cent, saying its profit from Japan "comes through license royalties which are subject to contractual minimums".

Just six groups on the blue-chip index missed out on the rally, including Legal & General which announced its final results. The insurer raised its dividend by nearly 25 per cent, yet still edged back 0.4p to 110.7p as profit-taking after a strong start to 2011 was blamed for its weakness.

On the FTSE 250, Aegis was also updating the market, and the advertising group's optimism for the year ahead and its forecast-beating revenue figures for 2010 saw it driven up 8.2p to 138.6p. There was an even bigger gain for SIG, however, which advanced 9.4p to 130.5p after the insulation compay posted a rise in its underlying annual profits of 3 per cent.

Still, it was not enough to take the mid-tier index's top spot, which went instead to Heritage Oil. The oil and gas explorer has seen a re-emergence of takeover speculation around it in recent weeks, and yesterday reports emerged that it had received – and rejected – a 425p-a-share informal bid; the news lifted it 23.8p to 313.5p.

Betfair faced some harsh words from Espirito Santo which initiated coverage on the betting exchange with a "sell" recommendation. "We do not believe that Betfair's superior technology platform on its own is enough to justify its premium rating in the sector," said the broker. Yet clearly investors were feeling more positive – perhaps because it is Cheltenham week – and the gambling group shrugged off the criticism to climb 23p to 877.5p.

There was, finally, some good news for investors in HMV as the high street chain closed 3.75p ahead at 15.25 after bullish comments from its chief executive. Claiming he was "very confident [its staff] have a long term future", Simon Fox said discussions being held with its consortium of banks have been "very positive".

Suggested Topics
News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star