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TGI Friday as today's surge keeps Footsie bandwagon rolling

Last updated: 16:56 01 Feb 2013 GMT, First published: 17:56 01 Feb 2013 GMT

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After spending most of the week treading water, Footsie put on a spurt on Friday to finish the day up 70, and the week up 63, at 6,284.

The UK Purchasing Manager's Index (PMI) for Manufacturing eased back to 50.8 in January from December's reading of 51.4, but crucially remained above the 50 level which marks the divide between expansion and contraction.

Eurozone PMI manufacturing, meanwhile, hit an 11-month high while January jobs data from the US was about in line with expectations, while the December figures were revised to reflect a larger number of new jobs created in that month.

Meaty BT (LON:BT.A) profits sent the telecoms leviathan to the top of the Footsie tree. BT was up 6.5% after it beat profit forecasts for its latest quarter thanks to a sterling performance from its broadband arm.

Third quarter pre-tax profits were 7% higher than last year at £675mln, which was better than expected thanks to strong demand for its internet broadband, as well as tight cost controls.

Ahead of results next week chip designer ARM (LON:ARM), up 3.5%, was also wanted.

At the other end of the Footsie tree, Tate & Lyle (LON:TATE) saw its share price dissolve away some. Shares shed 1.1% after the sweeteners firm warned that rising corn prices will eat into its full-year profits by around £7mln.

Barclays (LON:BARC), down 0.3%, was another heavyweight taking the low road, as reports circulate that the group might have been guilty of making secret loans to Qatar investors so the money could be reinvested in the bank’s 2008 cash calls.

The latest concerns follow hot on the heels of yesterday’s disclosure by the Financial Services Authority (FSA) that its probe of 173 interest rate hedging products found that more than 90% were mis-sold.

Fears that the lenders will have to shell out compensation are hanging over the banks, with Royal Bank of Scotland (LON:RBS) and Lloyds Banking Group (LON:LLOY) also joining Barclays in the red today.

Away from the blue-chips, the AIM All Share rose 8 to 741, thereby ensuring the index ended the week marginally up on the week.

Beacon Hill Resources (LON:BHR) was a shining light on the junior market today, steaming ahead 45%.

The coal miner has completed a lease agreement for railway rolling stock to carry coal to the Port of Beira, with first shipments pencilled in for the autumn.

The company said the agreement, with rolling stock lease specialist Thelo, was an important milestone for Beacon Hill and a prerequisite of obtaining confirmation of a slot on the Sena railway to Beira.

Beacon Hill is currently trucking coal from its Minas Moatize in Mozambique to the port and this will continue as an interim measure until the expected commencement of rail operations in the third quarter of 2013.

Going in the other direction was New World Oil & Gas (LON:NEW), which slumped 42% after plugging and abandoning its Blue Creek #2A ST well.

It said the findings of well did not merit more work, such as running casing or well testing.

Brokers were queuing up to suggest the price fall had been overdone, however. “I think there is a reasonable retail element in the stock at the moment, and at this level, I think we’ll see speculative buying in this stock up into the next well result, especially now that it is so undervalued,” Seymour Pierce analyst Sam Wahab told Proactive Investors.

Similarly, Shore Capital analyst Craig Howie highlights that this is just the first of three wells, and he points out that the next one, Rio Bravo 1 well, is targeting a geologically independent prospect.

“Today’s share price reaction implies there is no value [left] in Belize, but we would certainly contest that,” Howie said.

Leyshon Resources (LON:LRL) was 8% firmer after its managing director bought shares worth £268,000 in the company.

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