Market update - 25 February

The FTSE 100 was 21.58 points ahead at 3838.02 while the FTSE 250 advanced to 6056.32, up 150.57 points, at around 11:50 am this morning. Financial stocks rebounded thanks to overnight gains on Wall Street.

Lloyds Banking Group was the strongest – gaining close to 9 per cent or 4.7p or 58.6p – while the Royal Bank of Scotland, which is due to post full-year results tomorrow, was 7.2 per cent or 1.6p ahead at 23.7p.

Legal & General also recovered, gaining 4.8 per cent or 1.7p to 36.9p, as the insurance sector bounced off last night’s lows.

Moving up

Property group Hammerson, whose shareholders are due to vote on a proposed rights issue today, was more than 7 per cent or 22p stronger at 332.75p after JP Morgan switched its stance on the stock to “overweight” from “neutral”.

“Arguably one would only want to rush into the undercapitalised property sector if stocks are 100 per cent ‘bullet proof’ and obviously cheap. [Our analysis of] Hammerson and British Land [shows] that we are not there yet. However, we are (slowly) becoming more constructive on the sector: (i) [as] valuations of (better) capitalised companies start to make some sense, (ii) the need to de-leverage may give attractive entry points over coming months, and (iii) companies may find surprising ways to de-gear, for example via M&A,” the broker said,

“In this perspective, we believe Hammerson should be on investors radar screen[s]…”

Also on the upside, pugs group Mitchells & Butlers gained 4.7 per cent or 10p to 222.75p on rumours that a large institutional investor was looking to raise its stake in the company.

Moving down

Parts of the mining sector remained unsettled, with Anglo American losing 2.9 per cent or 30p to 1003p after Citigroup reduced its target price for the stock to 1100p from 1264p.

“Recent divestments and the synchronised downturn in the economy have made AAL’s earnings far less defensive than in the past; we expect earnings to fall by 74 per cent in 2009,” the broker said, adding:

“Whilst we can see longer term value through project development, we think the company has less flexibility than its peers to manage costs and we seen no obvious near term catalysts.”