FTSE races to record highs as CRH climbs
Reuters
Published Mar 20, 2015 17:19
FTSE races to record highs as CRH climbs
By Sudip Kar-Gupta
LONDON (Reuters) - Britain's top share index hit record highs on Friday, vaulting above 7,000 points for the first time in its history.
The blue-chip FTSE 100 index (FTSE) closed up 0.9 percent at 7,022.51 points, led by cement company CRH (L:CRH), which surged on expectations of lucrative asset purchases. The FTSE's record intraday peak on Friday stood at 7,024.21 points.
Retail investors often use the fact that a stock market has risen above such key levels as a sign that a bull market has momentum. Germany's DAX (GDAXI), for example, has advanced past 12,000 points to set record highs this year.
European stock markets have been buoyed by the European Central Bank's bond-buying programme -- known as quantitative easing (QE) -- that is aimed at boosting European economic growth.
Record-low interest rates from major world central banks have also pushed down returns on bonds and cash, driving investors to the better returns from shares.
"The ECB may well have been late to start quantitative easing, but ironically its arrival coincides with improving euro zone economic data," said Trevor Green, head of institutional equities at Aviva Investors.
"As our primary trade partner, this is good news for earnings for those exposed to the region," Green said. "As we come to the end of the March reporting season for UK companies, investors can take heart from broadly positive results with dividend payments surprising on the upside."
CRH rose 5.1 percent, making it one of the best-performing FTSE stocks in percentage terms, after Holcim (VX:HOLN) and Lafarge (PA:LAFP) salvaged a planned multi-billion-euro merger to create the world's biggest cement company.
CRH has agreed to buy 6.5 billion euros (4.71 billion pounds) worth of their assets, which would give antitrust clearance for the Holcim-Lafarge deal. The new assets would transform CRH into the world's third- biggest building materials supplier.
"The huge sums you speak of could be seen as a negative for the stock, but in this instance and especially given the positive outcome of the Lafarge-Holcim situation, the acquisitions will indeed strengthen CRH's position," said Accendo Markets' analyst Augustin Eden.
British bank TSB (L:TSB) -- which is not in the main FTSE 100 index -- also rose 2.1 percent after agreeing to a 1.7 billion-pound takeover by Spanish lender Banco Sabadell (MC:SABE) in one of the biggest cross-border banking deals since the financial crisis of 2007-09.
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Lloyds (L:LLOY), ordered to sell TSB by regulators as a condition of its 20 billion-pound bailout during the financial crisis, said it had agreed to sell a 9.99 percent stake to Sabadell and to sell its remaining 40.01 percent.
Miner Vedanta (L:VED), which like TSB is also in the FTSE 250 mid-cap index, surged 16.3 percent as traders welcomed a move by the company to challenge a demand for more taxes on its Cairn India unit.
Written By: Reuters
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