London shares rise on Europe, company earnings

London shares rose on Thursday following strong earnings figures by several UK companies and a more positive mood on eurozone markets, traders said.

The benchmark FTSE 100 index gained 78.84 points or 1.36 percent to 5,573.16.

Royal Dutch Shell, BSkyB, Rolls-Royce and BG Group were among the London-listed companies to announce profit figures as the second quarter results season got into full swing.

David Jones, chief market strategist at IG Index, said investors' nerves were soothed by a pledge from European Central Bank presdent Mario Draghi to do whatever is necessary to support the euro.

"Markets seem to have taken this as a sign that the ECB could end up implementing QE (quantative easing) in a bid to keep government bond yields at more reasonable levels," he said.

"Cynics may see this as yet more talk around the euro crisis, rather than much-needed action ? the last couple of years are peppered with strong rallies inspired by great speeches which have soon after given up the ghost," Jones said.

"But markets have slid quite heavily over the past week and did feel like they were looking for an excuse to rally."

Rolls-Royce shares surged 6.69 percent to 885 pence on news that the aero engine maker's first-half net profits soared on rising revenues, a bumper order book and the sale of its stake in US-based International Aero Engines.

Earnings after tax jumped 24 percent to ?1.19 billion in the six months to the end of June, compared with ?842 million in the same part of last year.

The company's order book increased by 4.0 percent to ?60.1 billion, while underlying revenues swelled five percent to ?5.8 billion in the reporting period.

"Rolls-Royce has delivered solid growth in underlying revenue and underlying profit in the first half of the year," said chief executive John Rishton.

BSkyB shares gained 3.14 percent to 706.50 pence after the pay-TV giant posted rising annual net profits on solid demand for its television, Internet and telephone services.

Earnings after tax jumped to ?906 million in the group's 2011/2012 financial year which ran until the end of June.

"In what remains a tough economic environment, customers are choosing Sky over other providers," said chief executive Jeremy Darroch.

BG Group also rose, adding 2.13 percent to 1,246 pence although the energy producer said its net profits plunged 77 percent in the second quarter compared with a year earlier on a write-down to its US shale gas business.

Revenues rose nine percent to $5.79 billion, though the company lowered its production estimate for 2012 to 720,000 barrels of oil and gas per day from 750,000 barrels.

However, Shell shares dropped 2.26 percent to 2,137.50 pence in the wake of the oil giant's announcement that second-quarter net profits tumbled 53 percent to $4.06 billion on the back of sliding world oil prices and slack demand.

Total oil and gas production rose 1.9 percent to 3.103 million barrels of oil equivalent per day, aided by giant projects in Canada and Qatar. However, analysts had predicted a 4.0-percent increase.

"Our industry continues to see significant energy price volatility as a result of economic and political developments," Shell chief executive Peter Voser said in a statement.

"We are moving forward in volatile times. Our profits have fallen with energy prices."

At 5:25 pm, sterling was trading at $1,5681, up from $1.5480 late on Wednesday.

The British currency was little changed against the single European currency, at 1.2765 euros versus 1.2758 euros a day earlier.

Source: http://news.yahoo.com/london-shares-rise-europe-company-earnings-163035967.html

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