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FTSE 100: Improvements in peripheral bond yields continue to drive the Christmas rally

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Category: The FTSE 100 Report

Published on Wednesday, 07 December 2011 11:14

The Cac on the other hand is one of the best performers up over 2.5% but then this index has seen the most declines during the turmoil due to its banking sector. 

The FTSE 100 (INDEXFTSE:UKX) is 0.41% higher on the day at 5,591.64.

"Bond yields have been tumbling significantly in the past few days. This has led to improved investor sentiment in the stock market and been the main driver behind the Christmas rally so far this December, with the FTSE 100 leading the way," says a morning exchange rate note from Simon Denham at Capital Spreads.



The FTSE is up over 2% alone so far this month with the German Dax only a meagre 0.5%. 

The Cac on the other hand is one of the best performers up over 2.5% but then this index has seen the most declines during the turmoil due to its banking sector. 

"The big question is whether this rally can be sustained and as existing resistance levels are surpassed, traders look for the next targets to the upside.  With the FTSE 100 at 5625 at the time of writing the next targets over the near term for the bulls are 5650/75 and then 5720," says Denham.

On the FTSE corporate front we see:

Kesa Electricals Interim Results saw revenues fall 7.9% on a lfl basis to EUR2.57bn and an adjusted LBT of EUR13.6m. The dividend is unchanged at 2.25 cents and having agreed the sale of Comet is taking exceptional charges of EUR133.6m largely in respect of an impairment of assets at Comet. It added that it has seen weakening market conditions in H1 but was well-prepared for peak season.

Carillion Trading Statement reports that underlying PBT and underlying EPS are expected to increase strongly, in line with market expectations with year-end net debt now expected to be below £100m and 'significantly better' than its previous target of below £125m. Revenue will be broadly similar to that of 2010. Its pipeline of contract opportunities remains over £30bn adding that it was well-positioned to make further progress in 2012 and over the medium term.

Stagecoach Interim Results saw revenues increase slightly to £1.29bn with PBT falling to £90m (£126.8m). The dividend is raised over 9% and has seen a good start to H2. It separately announced a  £44m investment in new double decker vehicles in North America and the UK.