Rolls Royce rises in a market dampened by continued eurozone worries

<p>Despite a positive start for the FTSE, the index quickly slipped into negative territory where it remained for the rest of the trading sessions. The […]</p>

Despite a positive start for the FTSE, the index quickly slipped into negative territory where it remained for the rest of the trading sessions.

The stronger start was attributed to better than expected industrial production and retail figures from China. There had been great concern over the slowing down of the world’s second largest economy, but with several rounds of better than expected data there is now hope that the bad news has bottomed out and the early stages of a turnaround could be in progress.

Unfortunately the good news was short lived and interrupted by the ever present eurozone crisis. Concerns over Greece returned to haunt investors and weighed on sentiment. Despite the Greek Parliament passing a new Austerity Measures Bill on Wednesday, albeit by a tight margin, it has been decided that the next tranche of aid will be held back until late November when the Troika produce a final report on how closely Greece is complying with the terms of the bailout. The Greek Deputy Finance Minister confirmed that the Treasury’s liquidity is almost exhausted, indicating that Greece can’t afford to play the waiting game much longer.

Looking at individual UK stocks, Rolls Royce was a standout performer, gaining 1.8% throughout the course of the session. In a trading report it stated that its current trading is consistent with management’s earlier forecast and it sees good growth in full year underlying revenue and underlying profit.

Lonmin has rejected a reverse takeover proposal from Xstrata, its largest shareholder of 25%. Xstrata claims that the aim of the takeover attempt was not to take control but an effort to remove current management who they do not believe are capable of keeping the loss making group alive. Lonmin also detailed a discounted $817 million rights issue, its second cash call in three years, as it announced a $698 million full year loss. Shares in Lonmin are already down over 50% so far this year and did drop in early trading, however, they have managed to claw back some of those losses, finishing the day up 0.8%. It still remains unclear whether Xstrata will subscribe to the rights, Xstrata finished down 0.6%.

With a lack of domestic economic data this afternoon, investors were inspired by positive news from the US where the consumer sentiment data rose to its highest level since 2007. The University of Michigan reading came in better than expected, meaning that consumers feel more optimistic about personal finance, employment prospects and the overall economy not just in November but for the next five years. However the news failed to push the FTSE into the blue for the close and it ended down 0.1%.

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