UK markets recover with help for banks and builders

By MoneyhighStreet Staff. Published on July 23, 2008 This post currently has no comments.

HBOS
Strong performances from banking and construction firms drove the London stock exchange up today (July 23rd), as it recovered from the losses sustained earlier in the week.

The FTSE 100 index closed up nearly 90 points at 5449.90, after rallies from several builders and a number of financial institutions.

Vodafone, who suffered massive losses yesterday when it revealed that it expected profits to slump this year, kick-started the recovery on the blue chip index when it announced a share buyback programme.

The news buoyed the mobile phone company, ensuring it closed up nearly two per cent at 131.35.

However, the main gains on the market came as falling oil prices lifted banking stocks as inflationary fears receded. This news, coupled with talk of a takeover from Spanish rival BBVA, pushed HBOS stocks up 17.24 per cent to 306.

Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland also rose on the oil price news.

UBS strategist Gareth Evans explained to Reuters: "The consensus position is to long energy and short financials … Financials have seen such a massive de-rating. If we start to see the oil price comes off, the temptation to switch those two becomes much greater."

Elsewhere, the news that Goldman Sachs was listing Friends Provident as a "conviction buy" from "not rated" meant the insurer jumped 13.11 per cent to 90.60.

Finally, house builders Barratt and Taylor Wimpey enjoyed good days, with their stocks climbing 21 and 14 per cent respectively.