Reuters: Hot Stocks: Financials lift FTSE 100 back toward two-month highs

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Financials lift FTSE 100 back toward two-month highs Aug 5th 2013, 08:17 Mon Aug 5, 2013 4:17am EDT * FTSE 100 up 28.04 points at 6,675.91 * Lloyds boosted by dividend talk * RBS knocked by Soc Gen downgrade By David Brett LONDON, Aug 5 (Reuters) - Britain's blue chip shares rebounded on Monday, with Lloyds Banking Group leading gains in banking stocks on a report it could soon start paying a dividend. By 0758 GMT, the FTSE 100 was up 28.04 points or 0.4 percent at 6,675.91, after slipping off two-month highs on Friday when weaker-than-expected U.S. jobs data triggered profit taking. The UK's benchmark index, however, is clawing its way back towards its all-time high of 6,950, with support from investors hunting for yield and expectations that the Fed will delay winding down its stimulus measures. A Reuters poll on Friday found that fewer U.S. primary dealers expect the Fed to begin reducing economic stimulus in September than they did a month ago. "The knock-on impact of the dovish central bank policy is that yield in other asset classes remains suppressed, so equities remain the investment destination of choice," Richard Hunter, head of equities at Hargreaves Langdon, said. Hunter said that should the current dovish back-drop remain the status quo then it wouldn't be too long before the FTSE 100 would again be testing highs after failing to break new all-time highs earlier this year. State-backed UK lender Lloyds rose 3.5 percent with traders citing a report in the Financial Times saying that Chief Executive Antonio Horta-Osorio had told potential investors that he expects to see up to 70 percent of the bank's earnings returned to shareholders by 2015. HSBC, Europe's biggest bank, was set to unveil half-year year results. Its profit is set to rise 15 percent to more than $14 billion as a three-year cost cutting plan starts to pay off and lower bad debts compensate for a fall in revenue. Royal Bank of Scotland, however, fell 1.2 percent after Societe Generale cut its recommendation on the UK lender to "sell" following the bank's disappointing results last week. Earnings on the whole remain mixed with 63 percent of UK-listed firms meeting or beating expectations in the current quarter but with quarter-on-quarter growth down 6.4 percent, prompting forecasts for the third-quarter to be cut by 6.4 percent, according to Thomson Reuters StarMine data. "EPS revisions ratio continues to disappoint and it may not be until Q4 when the data improvement is reflected in management optimism. At least the 12-month forward aggregate looks to have stabilised as the PE multiple again tests 12 times," Peel Hunt says in a note. British engineering company Smiths Group topped the fallers list, down 2 percent after terminating discussions over a sale of its medical division. (Editing by Susan Fenton) Link this Share this Digg this Email Reprints

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