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Markets quiet ahead of stress tests

Friday saw a relatively quiet conclusion to the week, investors seemingly preferring to hold fire to digest the results of European Banking Authority stress test that were to be announced post market close. Despite continuing debate surrounding the stringency of the tests, the EBA has said they would be tougher this time round and it was anticipated that up to 15 of the 91 banks could fail, with German and Spanish institutions expected to perform poorly.

After a day of failing to find any sort of direction, the FTSE 100 finally ended the day just 3 points lower at 5844, with the rest of Europe and the US in similarly neutral territory at the time.

Despite worries over the tests, the UK banking sector was relatively well supported following better than expected results by Citigroup in the US. With leaked news suggesting all of the UK banks had past, the FTSE 350 banking sector closed down a modest 0.4%.

Heading the list of gainers in the FTSE 100 was Burberry Group. The luxury clothing and accessories group enjoyed an earnings and price target upgrade from Citigroup, who highlighted a strong first quarter and improved revenue and margin expectations. Despite already trading above the analyst’s new fair value of 1430p, the shares gained 4.2% to close at 1577p.

In fixed income markets, it was not surprising that yields on “safer” government bonds reduced in contrast to those of Italy, Greece and Spain which all saw marginal gains. Silver performed strongly to gain 1.2% on a day that saw little in the way of commodity or currency moves.

www.vertem.co.uk

This was posted in Bdaily's Members' News section by John Dance .