Hargreaves Lansdown results help FTSE close positive

European markets extended losses on Wednesday, with some indices hitting two-month lows as investors showed their nerves over weaker than expected European corporate earnings and growing signs of political tension within the eurozone.

Signs of a disagreement between Germany and France over the euro exchange rate dented sentiment in trading on mainland Europe. France believes the recent strength of the euro threatens corporate profits and economic recovery whereas Germany has quite clearly stated that the currency is not overvalued. This apparent disagreement adds to the uncertainty of the upcoming Italian elections and also the corruption scandal in Spain, prompting investors to lock in their profits and pause for breath.

The German DAX closed down 1.09%, the CAC shed over 1.4%, however, the FTSE bucked the trend and finished up 0.2% just shy of 6300.

Here in the UK corporate earnings were well received, Hargreaves Lansdown was a standout performer, gaining over 11% after posting record revenue and profits for the last half of 2012, driven mainly by an increase in client numbers. Another strong report came from Eurasian Natural Resources who also gained over 9% after reporting a strong rebound in iron ore and coal operations. Sector peers also caught onto the positive trend, with Kazakhmys and Rio Tinto gaining 2.6% and 1% respectively.

On a negative note UK and US authorities have fined RBS over $610 million for its role in the manipulation of the London Interbank offered rate, or Libor, after a report found serious failures in the controls and risk management systems at RBS. This is the third major bank caught up in the global investigation and more than a dozen more firms are being investigated by regulators, however, RBS did manage to avoid criminal liability in the US meaning it can retain its banking license there. Shares in RBS traded positively for most of the day but ended down 0.4%.

Economic data was in short supply on both sides of the Atlantic, with many European traders choosing to sit on the sidelines and focus on releases tomorrow with ECB President Draghi’s speech, in addition to UK rate decision and German industrial production, being among the highlights.