The packaging manufacturer Rexam firmed up last night as investors bought in ahead of updates from the group's American peers.
Analysts at Cazenove said forthcoming results from Crown and Aptar were likely to have important implications for Rexam's beverage cans and plastics businesses, respectively. Any hint of improving market conditions promises to lift sentiment around Rexam, which has been underperforming its rivals and the wider London market in recent months.
"We believe there is high likelihood that peers will report stable to improving market conditions within [the plastics] space over the coming reporting season, which should improve sentiment toward Rexam," Cazenove said, helping the shares to gain 1.6 per cent, or 4.4p, and hit 286p. "Coupled with yield support of 4.3 per cent at current levels, and a significant valuation disparity relative to its peer group, we believe the risk to Rexam's share price remains to the upside," it added.
Overall, support from the heavily weighted mining sector helped the FTSE 100 to close 1 per cent, or 48.3 points, higher at 5,210.17. It was the first day since September 2008 that it ended above 5,200 points. The mid-cap FTSE 250 index was also strong, gaining 82.79 points at 9,460.09. The rally in London was support by gains on the other side of the Atlantic, with the Dow Jones industrial average touching a 12-month high in early trading.
Despite the gains, the FTSE 100 remains below the levels seen before the Lehman Brothers bankruptcy. On 12 September, the Friday before the US investment bank went bust, the index was trading above 5,400 points. It began the month at just above 5,600, compared to September this year, which saw the index at about 4,800.
The banking sector was under pressure as bears moved in on the prospect of a capital-raising by Lloyds Banking Group, which declined by 2.5 per cent, or 2.39p, to 91.61p. Barclays was 1.2 per cent, or 4.35p, behind at 372.65p, while Royal Bank of Scotland, which was the subject of some negative comment from analysts at MF Global, closed 0.24p, or 0.5 per cent, lower at 48.1p.
On the upside, the miners were in fine form as a combination of rising metals prices and hopes of recovery lured bulls into the sector. Vedanta Resources gained almost 3 per cent, or 61p, at 2223p and Eurasian Natural Resources Corporation, which was initiated with a "hold" rating at ING, climbed 1.7 per cent, or 16p, to 946p.
Xstrata, up 1.6 per cent, or 15p, at 968p, was the subject of a report that it had told a leading investor it was likely to abandon its pursuit of Anglo American. Anglo duly closed 2 per cent, or 43p, higher at 2194.5p. "They have pretty much indicated to us they will be walking away," the unnamed investor was quoted as saying.
Further afield, the broadcaster ITV rose to 47.33p, an increase of just over 2 per cent or 0.95p, as some words of support from Goldman Sachs offset the impact of news of further complications in the company's search for new leadership. Goldman said that while it was disappointed that Tony Ball, the former BSkyB chief, had not been appointed chief executive, growing comfort with advertising forecasts for the third and fourth quarters had led it to revise its stance on the stock from "neutral" to "buy".
A round of benign broker sentiment boosted CSR, with the chip-maker's stock rising almost 4 per cent, or 17.4p, to 467p after Jefferies upped it from "hold" to "buy" and Citigroup revised its target price for the stock from 500p to 550p. "We continue to be buyers of CSR, arguing that the market is underestimating CSR's market share and operating leverage strength," Citi said in a sector review.
The broker also reiterated its "buy" stance on the technology company ARM Holdings, which was 1.7p firmer at 153.9p at the end of play. Raising its estimates, Citigroup said it expected ARM to deliver upbeat results when it publishes third-quarter numbers later this month, which in turn should help to raise hopes for the full year.
On the downside, the pubs company Punch Taverns fell back to 115.1p, a decline of 5.9p, or almost 5 per cent, after analysts at KBC Peel Hunt weighed in, revising their recommendation from "buy" to "hold" ahead of the group's preliminary results, which are due tomorrow morning.
The broker highlighted Friday's re-purchase of £102m in nominal A8 bonds, saying the discount of 2.1 per cent was a signal that discounts would reduce going forward. "This, in turn, could mean that the company would have to be more selective in the scope of pub sales going forward," KBC explained.
RBS undermined sentiment around easyJet, which ran into some rough weather, easing by 2 per cent or 8.1p to 396.8p, after the broker turned cautious and moved the airline's stock from "buy" to "hold", albeit with a target price revised up to 400p from 375p previously. "Looking to the coming six months, we see the group's core equity story shifting from being revenue led to being cost led," it said. "We think easyJet has good scope to improve its cost performance, but we would expect clear evidence of this only next spring. We expect confirmation of weakening revenues a lot sooner."