FTSE makes positive start with emerging bargain hunters

MORNING REPORT: Headline shares made a positive start as bargain hunters emerge after yesterday’s sell-off and as concerns eased over the Korean conflict, with investors showing some caution ahead of the latest GDP reading.

At 8:30am, the FTSE100 was up 23.28 points at 5,604.56 with the FTSE250 ahead 35.5 points at 10,654.8 and the FTSE Smallcaps little changed at 2,996.01.

Mining issues underpinned an early recovery in London as concerns over the Korean situation eased and metals prices stabilised.

A two-point cut in Ireland’s credit status by S&P kept bankers on the back foot and investors displayed some caution ahead of the latest UK GDP reading due out later this morning.

Amongst the miners, Kazakhmys led the way, gaining 35p at 1,426p, while Xstrata bounced 22p at 1,292p and Vedanta Resources improved 29p at 2,149p.

Product testing firm Intertek topped the early leaderboard, up 60p at 1,813p after an upgrade to conviction buy from neutral at Goldman Sachs.

Global caterer Compass Group was another high-flyer, ahead 12.5p at 540p after raising its dividend by a third in light of a jump in revenue and profits in the last year.

Water companies remained in vogue as United Utilities reported half-year numbers slightly ahead of management expectations. UU shares rose 1p at 618.5p, while peer Severn Trent gained 8p at 1,458p.

Precious metals processor Johnson Matthey climbed 28p at 1,868p on reporting a rise in profit before tax rose to £144.1m in the half-year end-September, up from £109.5m the prior year.

Banks put in a muted performance as Ireland’s debt woes continued to weigh, but only Barclays lost ground, down 3.2p at 261.05p.

Lloyds edged up 0.4p at 63.75p and Royal Bank of Scotland rose 0.08p at 40.13p, while Standard Chartered rallied 10p at 1,747p on hope of a quick resolution to the problems in Korea.

Other notable gainers included outsourcing firm Capita, up 12.5p at 669p, global brewer SABMiller, ahead 16p at 2,076p, and temporary power supplier Aggreko, 13p higher at 1,492p.

There was weakness in the retail sector, with fashion house Next down 23p at 2,032p and supermarket giant Tesco off 2.9p at 415.35p.