Strong Unilever earnings fuel gains in UK shares

Wed Jan 23, 2013 4:29am EST

* FTSE 100 index adds 0.1 percent, stalls at 6,200 level
    * Unilever hits all-time peak after full-year results
    * Takeover chatter fuels gain in United Utilities
    * TUI Travel drops as German parent dashes takeover hopes

    By Jon Hopkins
    LONDON, Jan 23 (Reuters) - Strong earnings from household
goods firm Unilever drove gains in Britain's top share index on
Wednesday, with the numbers boding well for the nascent
full-year results season.
    Unilever shares jumped to a record high, alone
providing almost 3 points of the FTSE 100 index's gains with a
2.3 percent rise in strong early volume of almost half its
90-day daily average in the first hour of trade. 
    The global consumer goods company earlier reported
underlying sales growth of 6.9 percent or 2012, beating
forecasts of 6.5 percent, propelled by double-digit growth in
emerging markets. 
    "Unilever looks to have moved from a recovery play to a core
portfolio holding. Exposure to the Emerging Markets remains
enticing, cashflow and the resulting dividend payment still
attractive, while its defensive attributes continue to appeal,"
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers
said.
    At 0916 GMT, the FTSE 100 index was up 7.85 points,
or 0.1 percent, at 6,187.02 points, having reached a 2013 peak
at 6,199.59 in early deals. The blue chip index closed flat on
Tuesday, weighed by falls in financials and mining stocks.
    "Investors have banished thoughts of an imminent correction
and are back out in force this morning thanks to more positive
results," Mike McCudden, Head of Derivatives at stockbroker
Interactive Investor said.
    "Furthermore, with strong signals that we will see a bill
from the U.S. House of Representatives granting a four month
extension to the debt deadline, investors are happy to ride the
current wave of confidence for a while longer."
    Republican leaders in the House signalled on Wednesday that
they would aim to pass a bill to extend the U.S. debt limit. The
White House said this would remove uncertainty about the issue.
 
    The Standard & Poor's 500 index rose to a fresh
five-year closing high on Wall Street on Tuesday on the debt
ceiling news, also supported by some positive earnings reports.
    Back in London, BHP Billiton also lent strength to
the blue chips, up 1.1 percent and providing around 2 points of
the FTSE's gains.
    The global miner boosted its iron ore output by 3 percent in
the December quarter, as it races to supply more of the raw
material to Chinese steelmakers despite signs of a softening
market. 
    BHP's advance lifted the heavyweight mining sector
, while energy stocks also found gains
benefitting from a firmer crude price as well as some
underlying takeover talks.
    BG Group extended Tuesday's gains, up 0.3 percent
amid rehashed speculation that BP was running the
slide-rule over the company, according to a Daily Mail report. 
    The Independent newspaper also picked up on the renewed bid
rumours and said BP, Royal Dutch Shell and Exxon Mobil
 have all been thrown up as possible bargain hunters for
BG, together with buyers who may emerge from China.
   BP was up 0.3 percent, and Royal Dutch shares were flat.
   Among other takeover chatter, United Utilities added
1.7 percent, the most traded FTSE 100 stock reaching its 90-day
daily volume average in the first-hour of trade, on speculation
that a consortium of infrastructure funds were lining up a bid
of between 8 and 10 billion pounds for the multi-utility,
according to the Daily Telegraph market report.
    The Financial Times however, pointed out that non-executive
director Sara Weller bought shares in United Utilities on
Tuesday, suggesting there is no real foundation to recent bid
gossip.
    And a touch of takeover hopes knocked TUI Travel 
shares 4.8percent lower, with its parent, German travel and
ourism group TUI AG saying it has no intention of
making an offer for the majority-owned British unit.
   
    Among other FTSE 100 fallers, ex-dividend factors clipped
1.97 points off the index, with contractor caterer Compass Group
 and utility Scottish & Southern Energy both
trading without entitlement to their latest payouts.

 (Reporting by Jon Hopkins)