Reuters: Hot Stocks: M&S leads UK FTSE higher after sales beat

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M&S leads UK FTSE higher after sales beat Apr 11th 2013, 11:06 Thu Apr 11, 2013 7:06am EDT * FTSE 100 up 0.3 pct to 6,406.41 points * Index up for 4th straight session, investors bet on stimulus * M&S boosted as revenue beat drives out sellers By Francesco Canepa LONDON, April 11 (Reuters) - A rally in retailer Marks & Spencer put Britain's top share index on track for a fourth straight session of gains on Thursday, although its rise was capped by a fall in mining shares. Shares in M&S rose 3.2 percent, having already traded nearly 1-1/2 times their full-day volume average for the past 90 days, after the chain posted a smaller-than-expected fall in quarterly sales. The jump on Thursday added to a 3.7 percent rally in the previous three sessions, which saw investors cash in on their negative bets, or "shorts", on M&S after a 9 percent fall since mid-March. Short sellers borrow securities with a view to selling them, betting they will be able to buy them back at a lower price before returning them to the lender. "I'm not sure it's necessarily people turning positive on the story but there was short-covering going on ahead of the results and the last few shorts have been squeezed out this morning," CMC Markets head of UK sales trading Matt Basi said. "I wouldn't be surprised to see that (trend) turn over the rest of the week." Short interest in M&S, as measured by the proportion of its shares outstanding on loan, was close to its year low at 2.7 percent before the results, having fallen nearly one percentage point since mid March. Nevertheless, short interest in M&S was more than twice the average for all shares in the FTSE 100 index, showing underlying sentiment surrounding the retailer remains negative. The FTSE was up 18.99 points, points or 0.3 percent, to 6,406.41 at 1049 GMT, taking its gains for past three sessions to around 2.5 percent. Traders said their clients have been happy to buy UK blue chips on the dips this week, encouraged by fresh highs in U.S. equity indexes and by expectations of continued monetary support from central banks. Weaker-than-expected U.S. labour data last week were seen as strengthening the case for the U.S. Federal Reserve to maintain its quantitative easing programme. CHINA BOOST Supporting sentiment on Thursday was data showing greater-than-expected money supply growth in China, a key importer of consumer goods and especially luxury products. Shares in premium brand Burberry rose 2.6 percent, outpacing continental peers Richemont and Hermes , both up around 2 percent. Gerard Lane, strategist at Shore Capital, recommended buying mining stocks on signs of a strengthening economy in China, the world's largest consumer of metals. "For equity investors the mining sector appears likely to be the major beneficiary, in our view, as the sector appears undervalued, and unloved, as higher money supply growth normally feeds through to higher metal prices," Lane said in a note. Rio Tinto and BHP Billiton, which derive nearly a third of their revenue from China, were down 0.3 percent and 0.7 percent, outperforming a 1.1 percent fall for the broader mining sector. The sector succumbed to a bout of profit taking after a 4.8 percent gain in the previous three sessions, helped in part by strong Chinese imports data. Leading fallers was Russia-focused steelmaker Evraz after it reported a surprise 2012 loss and cautioned on its outlook. Overall, basic resources stocks knocked 7.8 points off the FTSE on Thursday. Link this Share this Digg this Email Reprints

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