By Steve Goldstein
U.K. banks were trading higher Friday afternoon, with a rise in
mortgage approvals giving a modest boost to confidence.
Barclays rose 8% and the Royal Bank of Scotland added 7% to
conclude a wild week in the banking sector.
Approvals rose to 31,000 in December from 27,000 in November,
though it still was the second-worst figure in history. Total net
lending also rose.
"If these data continue to show an improvement in the flow of
credit then this is tentative good news," said Alan Clarke, an
economist at BNP Paribas.
In afternoon trade, the FTSE 100 was virtually flat at 4,183.80,
as markets took in a mixed reaction to economic data from the
U.S.
Elsewhere, property stocks were in favor as Morgan Stanley urged
switching to U.K. ones from Continental European groups. Land
Securities rose nearly 8% and Hammerson added 3.4%.
Rio Tinto shares initially rallied in London on Friday as the
mining giant was able to take a step toward cutting $10 billion of
debt by selling iron ore and potash assets to Brazil's Vale. But by
the afternoon, the stock was trading 2% lower.
Rio Tinto (RTP), which only on Wednesday had admitted that it
may need to sell stock, said it will sell potash assets for $1.6
billion to Vale (RIO).
Coming on the heels of Xstrata's $5.9 billion rights offer, Rio
said the deal "demonstrates the depth and quality of our asset
portfolio and our ability to unlock value for shareholders despite
tough credit markets and economic conditions."
Analysts at Canaccord Adams said the ore was sold for 8.5 times
estimated earnings before interest, tax, depreciation and
amortization this year -- vs. the 1.9 times that Rio trades on.
They are located near Vale's Ucrum iron ore and manganese
operations, however, which benefits the Brazil firm.
Rio Tinto hadn't approved the potash project so the assets were
carried on its balance sheet at $33 million.
Xstrata shares slipped 9% and BHP Billiton dropped 6.7%.
Besides the miners, Shell also was a drag, falling 3% a day
after its mixed report of a $2.8 billion loss but an increase in
dividend.
AstraZeneca (AZN) wavered between gains and losses after
Thursday's 6.3% fall from its flat sales outlook.
Deutsche Bank upgraded the stock to buy from hold, with the
broker saying the sell-off was overdone. But Citigroup cut the
stock to hold from buy on the group's outlook.
Outside the FTSE 100, Henderson Group rallied 20% as it reached
a deal to buy rival New Star Asset Management , the debt-laden U.K.
fund manager, for 115 million pounds.
"A neat deal by Henderson, it should give them in excess of 50
million pounds of relatively stable revenues and enhance earnings
even after the 31 million pounds of restructuring costs," said
analysts at Evolution Securities.
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