London close: Stocks end higher despite Fed decision

London share prices ended modestly higher despite the US Federal Reserve’s decision to leave the door open to possible interest rate increases in September which, it must be pointed out, might add to the pressure on the Bank of England to also make a move soon.

The Footsie ended the session up by 37.87 points to 6,668.87, bolstered by strong corporate results from heavyweights in various sectors, including the likes of Shell, RBS and Astrazeneca while the second-tier FTSE 250 was up by just 8.19 points to 17,521.00.

Taking a macroeconomic perspective on the equity gains, the slightly more confident language from the US Federal Reserve overnight seems to have increased the market's confidence of at least one US interest rate rise in 2015.

The latest figures on US GDP, out on Thursday, seemed to validate that view, having come in ahead of forecasts once revisions are taken into account, although business investment, for example, continued to be weak.

Analyst Mike Van Dulken at Accendo Markets suggested the not entirely bullish performance from stocks was perhaps a "signal that investors have turned a corner, ready for a stronger hint and for the FOMC to break the seal sooner rather than later".

He added that while US jobs appear on the rise, the other half of the Fed's mandate - inflation – along with external events such as Greece and China and a stronger USD were legitimate reasons that could allow the central bank to hold off from a rate hike until year-end.

On a more worrying note, reports indicated that the International Monetary Fund might not be able to give its backing to a new bailout for Greece as soon as some had been hoping for.

Shell and Centrica announce big job cuts

As it revealed 6,500 job cuts, Royal Dutch Shell delivered a 35% decline in adjusted quarterly profits to $3.8bn though this was well ahead of consensus estimates of $3.4bn. The oil major also kept its dividend steady at $0.47 for both A and B shares.

Progress over its acquisition also lifted BG Group shares as well.

Centrica's own big swathe of job cuts were less well received. The British Gas owner announced it will slash a net 4,000 jobs from its workforce, double the rumoured amount, as it also almost doubled its first-half profit. The company, which said it was aiming to cost cuts by £750m a year by 2020, will cut back investment in oil and gas production by more than half.

High among the risers was drug group AstraZeneca as second-quarter numbers came in better-than-expected, with revenue and earnings per share both ahead of analysts’ expectations as generic competition and the effects of a stronger US dollar were offset by the spinning off of assets.

Royal Bank of Scotland saw profits decline in the second quarter, as a result of lower income at its corporate and institutional banking unit after it was downsized and higher restructuring costs, but nevertheless beat analysts' estimates by a wide margin.

Engine manufacturer Rolls-Royce stuck to its current full-year 2015 guidance and chose to emphasise the positive outlook for the year thanks to continued growth in its order book. Management however was still smarting after it was forced to downgrade its guidance for free cash-flow generation on 6 July.

Babcock International led the fallers despite the engineer saying it was on track to meet its full- and half-year forecasts. Its defence are has been expected to experience some softness but the group continued to experience strong demand from existing clients in its marine and support services divisions.

BT was another big faller despite a solid set of first quarter results that were close to City forecasts and left it on track to hit its full-year targets. Revenue of £4.28bn was down 2% and a tiny 0.3% short of consensus forecasts. On an underlying level the top line was flat, an improvement on the fourth quarter of the previous year.

Market Movers
techMARK 3,190.30 +0.42%
FTSE 100 6,668.87 +0.57%
FTSE 250 17,521.00 +0.05%

FTSE 100 - Risers
Royal Dutch Shell 'B' (RDSB) 1,861.00p +4.73%
InterContinental Hotels Group (IHG) 2,743.00p +4.57%
Royal Dutch Shell 'A' (RDSA) 1,839.00p +4.22%
BG Group (BG.) 1,079.50p +3.80%
AstraZeneca (AZN) 4,319.50p +3.07%
Smith & Nephew (SN.) 1,167.00p +2.82%
Taylor Wimpey (TW.) 190.40p +2.70%
Rolls-Royce Holdings (RR.) 749.50p +2.60%
ARM Holdings (ARM) 1,011.00p +2.12%
British American Tobacco (BATS) 3,740.00p +1.62%

FTSE 100 - Fallers
Babcock International Group (BAB) 985.50p -5.15%
Centrica (CNA) 266.60p -3.12%
Royal Bank of Scotland Group (RBS) 342.40p -3.06%
easyJet (EZJ) 1,644.00p -2.32%
Shire Plc (SHP) 5,590.00p -1.93%
Intu Properties (INTU) 326.50p -1.86%
GKN (GKN) 315.90p -1.77%
Inmarsat (ISAT) 885.00p -1.67%
ITV (ITV) 271.60p -1.67%
Carnival (CCL) 3,376.00p -1.66%

FTSE 250 - Risers
Hellermanntyton Group (HTY) 470.50p +41.67%
Laird (LRD) 400.10p +14.38%
Inchcape (INCH) 802.00p +6.58%
Bodycote (BOY) 682.50p +5.00%
Tullow Oil (TLW) 246.60p +4.71%
Greggs (GRG) 1,341.00p +4.36%
Senior (SNR) 291.10p +4.26%
Ophir Energy (OPHR) 114.90p +4.08%
Jupiter Fund Management (JUP) 465.00p +2.76%
Tullett Prebon (TLPR) 391.70p +2.62%

FTSE 250 - Fallers
TalkTalk Telecom Group (TALK) 309.30p -5.24%
Premier Farnell (PFL) 134.20p -4.14%
Countrywide (CWD) 531.00p -3.98%
Vedanta Resources (VED) 385.00p -3.39%
Lonmin (LMI) 53.80p -3.24%
Investec (INVP) 582.50p -2.92%
Melrose Industries (MRO) 269.30p -2.92%
Fisher (James) & Sons (FSJ) 1,093.00p -2.84%
Ocado Group (OCDO) 387.60p -2.81%
OneSavings Bank (OSB) 284.00p -2.74%