The blue chip index was supported by M&A (mergers and acquisitions) activity after Cairn Energy (LON:CNE) sold a 51% stake in Cairn India to base metal miner Vedanta Resources (LON:VED) for £5 billion. Both companies were among the leading performers in the index with gains of over 3%.
Oil and gas companies and banks were a drag on the blue chips today, while the overall mood in the markets was rather pessimistic after Japan said that its GDP growth slowed to 0.4% in Q2 in the latest sign that the ongoing economic recovery is not as strong as previously though. Last week, the US Labor Department reported that initial jobless claims rose by 2,000 to five month highs of 484,000. A week prior to that, the US government said that non-farm payrolls declined 131,000 in the previous month, while June’s estimate of a 125,000 decrease in payrolls was revised to 221,000.
Both the Federal Reserve and the Bank of England (BoE) left their respective interest rates unchanged at the current ultralow levels last week. BoE governor Mervyn King said that the recovery would be choppy, while the bank slashed its GDP growth forecasts for the UK for 2011. The Fed announced that it would buy more US bonds to bolster the economy.
Vedanta Resources (LON:VED) and Cairn Energy (LON:CNE) led the way with gains of 3.5% and 3.2% respectively. Clothing retailer Next (LON:NXT) also did well, climbing 1.4%. Insurer Prudential (LON:PRU) was the only other FTSE 100 constituent to tack on more than 1%.
Royal Bank of Scotland (LON:RBS) was the heaviest faller in the index with a 2.1% loss. Defence and aerospace systems manufacturer BAE Systems (LON:BA) and oil and gas supermajor BP (LON:BP) were close, shedding more than 1.5%. Tour operator TUI Travel (LON:TT) declined 1.5%.
http://www.proactiveinvestors.co.uk/companies/news/20109/vedanta-resources-and-cairn-energy-lead-ftse-100-after-cairn-india-sale-20109.html
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