Banks up, miners down FTSE 100 ends week up 1 per cent – Mindful Money’s Friday market close

17th May 2013

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The FTSE 100’s recent rally was broken on Thursday as disappointing data from the US quashed the recent wave of optimism.

Official figures showed that unemployment rose by 32,000 last week and there was also a drop in housing construction starts.

The topflight index ended Thursday down, albeit by just 5.75 points however it regained ground on Friday, rising 35.26 points, to close 1% higher over the trading week at 6,723.06 points.

Traders were boosted midweek when outgoing Bank of England governor Sir Mervyn King, in his final inflation report before he hands over to Mark Carney, gave some hope forecasting better growth and lower inflation for the UK economy. He predicted that UK inflation should fall to 2% by 2015.

But while Britain enjoyed some optimism, Eurostat reported that economic output across the Eurozone contracted by 0.2% in the first three months of the year. The single currency region is in the middle of its longest recession ever, after economic growth slumped for the sixth quarter in a row.

In addition, France, was pulled further into the slump as figures showed its GDP fell by 0.2% in the first quarter, following a 0.2% contraction at the end of 2012.

Within the financial sector, insurer Aviva rose 5% over the week to finish at 340.3p. In its latest interim statement it declared that new business had increased by 18% in the first quarter.

The 39% taxpayer-owned Lloyds Banking Group also enjoyed a rally this week, following the announcement from its chief Antonio Horta-Osorio, that the group was gearing up to return a full year’s profit. Its shares rose 7% to 62.84p, surpassing the Treasury’s 61.2p break-even price. Among the banks, HSBC firmed 2% over the trading week to 758.6p, while Barclays rose 4% to 326.8p.

Royal Bank of Scotland was the week’s big riser, jumping 12% to 336.8p after it revealed it was to make further job cutbacks from its retail banking head office over the coming two years. Matching its 12% leap over the week was water group Severn Trent, which rejected an early takeover bid from an international investment consortium. Its shares closed at 2,050p.

The miners were among the week’s big fallers on the index. Fresnillo lost 7% to close at 1,069p, while Evraz, the steepest faller over the week, shed 10% to 154.2p. Rio Tinto loosened 5% to 2899.5p and Eurasian Natural Resources, fell 8% to 271.6p.

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