Reuters: Hot Stocks: BP beat buoys UK blue chips as Lloyds takes PPI hit

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BP beat buoys UK blue chips as Lloyds takes PPI hit Oct 29th 2013, 08:49 Share this Email Print Reprints Tue Oct 29, 2013 4:49am EDT * FTSE 100 up 18.38 points at 6,744.20 * BP rallies on earnings beat, dividend hike * Lloyds toils after suffering another PPI hit By David Brett LONDON, Oct 29 (Reuters) - Britain's top share index edged higher on Tuesday, with the bulk of the gains coming from oil firm BP after its results beat forecasts and offset downbeat news from the banking sector. BP, the UK's sixth largest company, added 12 points to the FTSE 100 after it kicked off the third quarter results season for the world's top five investor-owned oil companies with results exceeding expectations and a dividend hike. BP's gains offset losses in the banking sector, which took 11 points off the FTSE 100, with falls led by Lloyds , down 3.5 percent after the UK lender announced a further 750 million pound charge in the third quarter for the mis-selling of payment protection insurance. Sentiment in the banking sector was also weighed down by European peers UBS and Deutsche, which were hit by allegations over a scheme to manipulate inter-bank lending rates. The FTSE 100 was up 18.38 points, or 0.3 percent at 6,744.20, by 0718 GMT. The index has traded sideways since last Thursday, in a narrow 6700-6750 range, but is up 11.6 percent since a sell-off bottomed out in June. "Markets have moved on higher as quantitative easing programmes have supported," Jawaid Afsar, sales trader at SecurEquity, said. "However, one must seriously question what the landscape would be if there had been no easing at all? Markets have had a good run recently and may pause for breath, but the trend is firmly to the upside." Optimism about the U.S. Federal Reserve offering further support at their next meeting which begins on Tuesday continued to underpin equity indexes, but traders warned the recent sideways move could be a sign of waning momentum and a precursor to a correction. Volumes on London's blue chip index were down 16 percent in October to a daily average of 590 million versus the average for the whole of 2013, according to Thomson Reuters data, suggesting investors were getting nervous as the index approached 13-year highs and earnings were in downgrade territory. A third of the way through the quarterly reporting season, 53 percent of companies have either met or beaten expectations, roughly in line with the previous three quarters, but 67 percent missed revenue expectations, according to Starmine data. "Given that earnings are beating and revenues missing expectations, this suggests that margins are taking some of the strain ... Earnings downgrades are now being entirely driven by revenues, with margins being revised up," UBS said in a note. "Although this is still early days, if the surprises continued at this rate, this would be worst reporting season for revenues since 2009." (Reporting by David Brett; editing by Mike Collett-White) Link this Share this Digg this Email Reprints

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