UK stocks post modest gains on stimulus hopes

LONDON (Reuters) - Britain's top shares were modestly higher on Friday, consolidating the strong gains seen in the previous session on hopes that central bank meetings next week will bring new steps to help the struggling global economy.

Another crop of UK bluechip results provided the main direction early on, with the numbers once again proving mixed, keeping investors uncertain on the overall earnings picture.

Barclays was the top FTSE 100 gainer, up 5.1 percent, after the bank beat expectations with an underlying half-year profit of more than 4 billion pounds, boosted by a strong top-line performance from its investment banking unit.

"We see these results as supportive given the discounted valuation ... While we recognise that post significant management change and the Libor issue Q2 is somewhat backward looking, the resilience versus peers in the investment bank in Q2 and the action on costs is encouraging," RBC Europe analyst Fiona Swafield said in a note.

Barclays was among Thomson Reuters StarMine's lowest ranked companies for earnings quality in the FTSE 100 with a score of 12 out of 100 prior to the release of these results, compared with the sector median of 38.

That means its earnings growth is expected to be difficult to sustain over the next 12 months based on what has contributed to those earnings in the recent past.

Other blue chip banks were also in demand, providing the main support for the FTSE 100 index as the sector reporting season continued, and with investors' risk appetite boosted by the hopes for possible fresh stimulus measures, or at least hints of them, from the Federal Reserve, European Central Bank, and Bank of England meetings all due next week.

Miners also lent their strength to the blue chips, as copper prices pushed higher on the hopes of new measures to boost global economies.

But Anglo American missed out on the mining sector's gains. It shed 2.4 percent after profits dropped almost 40 percent in the first half of the year as faltering global economic growth hit the prices of key commodities like iron ore and platinum, but failed to bring down costs.

PEARSON POOR

Pearson was the top blue chip faller, down 4.8 percent after the British education and publishing group said 2012 was turning out to be tougher than it expected. Profit fell by 10 percent in the first half, although it said it could still achieve growth for the full year.

At 0803 GMT, the FTSE 100 index was up 3.05 points, or 0.1 percent, at 5,576.21, having reached 5,595.04 in early trade, with the 5,600 big figure proving a barrier.

The blue chip index jumped 1.4 percent on Thursday after European Central Bank President Mario Draghi pledged to do whatever was needed to preserve the euro, boosting hopes for more decisive action on the currency bloc's debt crisis.

"Yesterday, risk appetite received a much needed bump-up by Draghi saying the central bank will do whatever it takes to preserve the euro," said Ishaq Siddiqi, Market Strategist at ETX Capital.

"But despite the gains spurred by the Draghi-inspired rally, room for further upside appears to be capped given that there has been no new developments on the (euro zone bailout fund) ESM's long-term function, while caution looms ahead of U.S. economic and corporate data out today."

The second reading for second-quarter U.S. GDP is due out at 1230 GMT, and the final reading of the July Reuters/University of Michigan consumer sentiment report scheduled for 1355 GMT.

No major British data is sheduled for release on Friday.

Source: http://news.yahoo.com/uk-stocks-post-modest-gains-stimulus-hopes-093009364--sector.html

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