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Footsie edges up ahead of options expiry

Once again there has been an undercurrent of buying in London this morning with the FTSE 100 index up around 30 points ahead of options expiry, which should liven things up a bit. The main themes have been another sharp fall in the gold price which has hit one or two of the miners and lower oil prices, which have benefitted the likes of British Airways.

According to the OECD, demand in member countries is set to average 48.6m barrels per day this year, a decline of 1.3% or 620,000 barrels from 49.2m in 2007, which would be biggest fall for 25 years.

There was also some interest in the bank sector after yesterday’s news from the US that the Securities and Financial Markets Association had said that newly originated loans to borrowers in high cost areas would qualify for incorporation into To-Be-Announced eligible mortgage-backed securities. This helped the shares of Freddie Mac and Fannie Mae, and UK banks have edged ahead accordingly.

Elsewhere, Michael Page broke off talks with Adecco saying its offer of about 400p per share materially undervalued the group. It added the proposed transaction structure was unattractive for shareholders as they would become minority shareholders in a company controlled by Adecco, but this does not look like the end of the story and shareholders should sit tight here.
 

Head of Research at Blue Index, specialists in trading

15/08/2008

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