FTSE closes flat on the day, underperforming broader EU stock charge

<p>The FTSE 100 closed flat on the day, down a marginal two points and underperforming broader strength in French and German stocks, as mining stocks […]</p>

The FTSE 100 closed flat on the day, down a marginal two points and underperforming broader strength in French and German stocks, as mining stocks and Lloyds Banking Group shares weighed on the UK Index. The French CAC index rallied 0.57% whilst German stocks saw the majority of investor demand, with the DAX gaining 0.81%.

FTSE 100 edged higher on the open following a positive session on Wall Street and in Asia overnight and this morning. Strong jobless data out of the United States yesterday afternoon in addition to data from the United States housing price index helped the Wall Street gain 50 points and the US Standard and poor stay comfortably over the key 1360 level.

The recent bout of strong data from the United States has really helped calm traders nerves after the Greek drama. These solid numbers are giving the impression that the world’s biggest global economy could mend the global growth story.

Company earnings have been a big driver of today’s equity moves. Stronger than expected results from Italian telecommunications firm Telecom Italia helped to reassure shareholders, after seeing earnings increase healthily.

Closer to home however, Lloyds’ earnings disappointed somewhat and with shares falling two percent on the day, this proved to be a drag on the UK Index. Indeed much of the UK banking sector showed signs of weakness following results from Lloyds. Lloyds reported today that it expected the climate to remain challenging for the rest of this year and into 2013, it also delayed its targets until beyond 2014. The banking giant reported a heavy pre tax loss of £3542million compared to a profit of £281million last year. It was dragged down by substantial charges in relation to Payment Protection Insurance (PPI). On the back of this fairly gloomy report Lloyds topped the FTSE biggest fallers, closing down 2.3%.

Looking at domestic news, Bank of England’s Market Director, Paul Fisher, went on record saying that the outlook remained incredibly uncertain and he remains open minded to another round of quantitative easing. Given the recent inflation figures which have come down to 3.2% from their high of over five percent this perhaps doesn’t look too farfetched and the markets have reacted positively on the back of his statement.

Capita continued to perform well this morning, again topping the FTSE 100 as it continues to ride high from its bullish comments yesterday where it said it was performing well and expected growth to accelerate. Brokers raising it target price helped the stock gain a further 3.83% this morning.

UK listed miners slipped back after gold and silver prices dropped off with Randgold Resources and Antofagasta being hit particularly hard. News surrounding the Glencore and Xstrata merger has quietened down for the time being as we await regulatory approval on the merger.

Economic data focused this morning on GDP data for both Germany and UK. Both sets of data came in as expected showing a broad decline in overall growth for the period of -0.2%. For Germany that translates to an overall growth Year on Year of 2%, whilst for the UK a more fragile figure of 0.8%. In the afternoon session, better than expected US Michigan Sentiment data, which came in at 75.3 and higher than the 73 expected by most investors, was not enough to push the FTSE 100 higher by the session close.

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