The FTSE 100 edged higher on Wednesday, led by Next after it reported results well ahead of consensus estimates, but weighed down by miners after a decline in metal prices.
Because commodities have fallen off and oil is weak, investors are seizing the chance to rotate out of mining stocks and oils and into retailers and financials as safe havens, a trader said.
By 8:42 a.m., the FTSE 100 was up 4.2 points, or 0.07 percent, at 5,899.7, after Japan led Asian markets higher overnight. Three companies going ex dividend took 2.5 points off the FTSE. On the macroeconomic front, UK average earnings and unemployment data are due out at 9:30 a.m.
NEXT, BAE SYSTEMS
Next rose 3.2 percent after it said its first half earnings per share rose 11.3 percent, adding that sales remained volatile compared with last year's figure of 172.6 million pounds. The results were well ahead of consensus estimates.
BAE Systems tacked on 1 percent after it reported operating profit of 635 million pounds, which was slightly above the forecast by analysts in a Reuters poll last week. It said its interim EBITDA rose by 39 percent, helped by its U.S. operations, including a one off accounting gain there.
Among utilities, Severn Trent added 0.2 percent after it announced the details of the Biffa demerger this morning, which Bridgewell analyst Nick Spoliar described as an exciting development for the market.
Miners were among the main decliners, with Vedanta Resources , Xstrata and Kazakhmys down between 0.9 and 1.9 percent. With the exception of copper, metals were generally down, although silver rebounded from a six week overnight low.
Oil stocks were steady with oil just below $64 a barrel. Markets are waiting the debate among members of the U.N. nuclear watchdog over Iran's atomic work, and on renewed concerns over disruptions to Nigerian supplies. BP rose 0.3 percent after JP Morgan raised the company to overweight from neutral and Royal Dutch Shell dropped 0.6 percent.
Among other standouts, Drax Group , which owns Europe's largest coal fired power station, added 0.9 percent after a broker target upgrade.
Vodafone and BT each added 0.6 percent. UK telecoms regulator Ofcom said it had proposed new controls on wholesale mobile voice call termination charges that would come into effect when the current regulation expires in March 2007.
Companies that went ex dividend were Diageo , which fell 1.3 percent, Scottish & Newcastle , which dropped 1.2 percent, and Shire Pharmaceuticals up 0.5 percent.
Among mid cap stocks, MyTravel Group fell 11 percent after it warned that its annual profit would be less than expected following difficult trading conditions.
The London Stock Exchange added 0.5 percent after Treasury Minister ED Balls said in a speech to Hong Kong business leaders that The government will introduce new legislation to protect its light touch approach to regulation of stock exchanges.