London close: Markets nervous ahead of Bernanke Q&A

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LONDON (ShareCast) - - Bernanke could spark market volatility
- Traders cautious ahead of US earnings season
- Eurozone industrial production disappoints

Dovish comments from a member of the Federal Reserve weren't enough to lift stocks on Monday, as markets remained cautious ahead of a speech by Ben Bernanke this evening and earnings reports from Wall Street heavyweights later this week.

Markets across Europe were supported early on by remarks from Federal Reserve Bank of Chicago President Charles Evans who said that the government should put "in place policies that slowly but surely bring the prospects of future revenues into balance with future spending".

He said that "monetary policy has an important contribution to make" and that the central bank will maintain its expansionary policies until its main goals are met.

However, as analyst Craig Erlam from Alpari explained this afternoon: "There's been an element of caution in the markets today, ahead of Bernanke's speech later at the University of Michigan. We tend to see a lot more volatility in the markets when Bernanke speaks and with the markets being caught off-guard by the apparent three-way split at the last meeting, over when to end the current asset purchases, Bernanke is likely to be bombarded with questions."

Meanwhile, following on from Wells Fargo (Other OTC: WFCNO - news) 's results on Friday, traders are now awaiting results from other banking giants this week, including Goldman Sachs (NYSE: GS-PB - news) , Morgan Stanley (Xetra: 885836 - news) , JPMorgan (LSE: JPIU.L - news) and Bank of America (Other OTC: BACYL - news) .

Erlam said: "Expectations are extremely low around fourth-quarter earnings, despite stock indices trading at multi-year highs, which suggests there's plenty of room for the rally to continue in the short term."

Weighing on market sentiment today was worse-than-expected industrial production data from the Eurozone. Output fell at an annual rate of 3.7% in November (Xetra: A0Z24E - news) , the largest contraction since November 2009.

FTSE 100 (FTSE: ^FTSE - news) : ENRC and G4S (LSE: GFS.L - news) gain after Credit Suisse (NYSE: CRP - news) upgrade

Mining giantENRC was among the risers after Credit Suisse upgraded the stock from 'neutral' to 'outperform' and hiked its target price from 350p to 400p. The broker said that its previous cautious stance in the second half of 2012 was due to concerns over earnings, balance sheet and M&A. "We think downside risks are now limited with potential re-rating catalysts in 2013."

Security solutions group G4S was also making gains after Credit Suisse raised its recommendation from 'neutral' to 'outperform' and lifted its target price from 275p to 330p. "The current price does not reflect the organic growth potential, driven by New Markets, of the group, its ability to add value via acquisitions nor its improving prospects within the UK market," the broker said.

Asset management peers Schroders (LSE: SDR.L - news) and Aberdeen were on the up after positive comments from JPMorgan Cazenove. The broker raised its target prices and kept 'overweight' ratings for both stocks, saying that despite a strong year in 2012, "the rating of the sector remains relatively modest by historical standards, especially if we further adjust for estimated surplus cash and cash generation in the current year".

Other financials were benefitting from broker commentary today: Resolution was higher after Credit Suisse raised its target price from 250p to 265p, retaining its 'neutral' rating; while Lloyds rose after Redburn raised its 2013 and 2014 forecasts for the bank.

In contrast, Associated British Foods (LSE: ABF.L - news) was feeling the effects of a downgrade by Nomura from 'buy' to 'neutral', while Sage was falling after Barclays (LSE: BARC.L - news) cut the stock from 'equal weight' to 'underweight'.

Oil giant BP (LSE: BP.L - news) was down after taking legal steps to cut the civil damages it faces for the Deepwater Horizon disaster by up to $3.4bn. The firm has asked a New Orleans court hearing the case against it for civil penalties and damages to rule that at least 810,000 barrels of oil had been captured during the spill and it should not be fined for them.

FTSE 250 (FTSE: ^FTMC - news) : Imagination (Other OTC: IMGTY - news) drops after downgrade

Chip designer Imagination Technologies (Other OTC: IGNMF - news) was a heavy faller today after Goldman Sachs cut the stock from its 'conviction buy' list. While analyst Simon Schafer still gives the shares a 'buy' rating, he said that market-share loss and competition concerns are key risks for the company.

News (NasdaqGS: NWS - news) that tech giant Apple (NasdaqGS: AAPL - news) has cut its order for components for the iPhone 5 due to weaker-than-expected demand could have also hit the shares today.

Coal and coke producer New World Resources also fell sharply after warning that as a result of recent declines in energy demand and broader market conditions, thermal coal inventories have been above the historical average levels. These conditions are likely to create pricing volatility and continued downwards pressure on thermal coal prices in the near term, it said.

Pubs group Greene King (LSE: GNK.L - news) edged higher after seeing record Christmas Day trading which underpinned growth in like-for-like sales.


FTSE 100 - Risers
Eurasian Natural Resources Corp (LSE: ENRC.L - news) . (ENRC) 334.00p +3.53%
Schroders (SDR) 1,868.00p +2.69%
Resolution Ltd. (RSL) 266.60p +2.22%
Lloyds Banking Group (LSE: LLOY.L - news) (LLOY) 54.92p +1.63%
Aberdeen Asset Management (Other OTC: ABDNF - news) (ADN) 397.70p +1.58%
ITV (ITV (LSE: ITV.L - news) ) 111.70p +1.55%
Burberry Group (Other OTC: BBRYF - news) (BRBY) 1,325.00p +1.53%
International Consolidated Airlines Group SA (CDI) (IAG) 210.40p +1.35%
Royal Bank of Scotland Group (RBS (LSE: RBS.L - news) ) 364.50p +1.14%
Petrofac Ltd. (PFC) 1,696.00p +1.07%

FTSE 100 - Fallers
Kazakhmys (LSE: KAZ.L - news) (KAZ) 785.50p -2.84%
Wood Group (John) (WG.) 783.50p -2.18%
Associated British Foods (ABF) 1,500.00p -1.96%
Whitbread (WTB) 2,413.00p -1.95%
Polymetal International (POLY) 1,136.00p -1.90%
Aggreko (AGK) 1,749.00p -1.74%
Intertek Group (Other OTC: IKTSF - news) (ITRK) 3,053.00p -1.52%
Severn Trent (Other OTC: STRNY - news) (SVT) 1,550.00p -1.46%
United Utilities Group (UU.) 685.00p -1.44%
Meggitt (MGGT) 425.20p -1.44%

FTSE 250 - Risers
JD Sports Fashion (LSE: JD.L - news) (JD.) 720.00p +5.80%
Centamin (DI (KSE: 003160.KS - news) ) (CEY) 58.75p +5.29%
Lonmin (LMI) 332.60p +4.26%
Supergroup (SES: E1:S10.SI - news) (SGP) 603.00p +3.97%
ITE Group (LSE: ITE.L - news) (ITE) 249.80p +3.65%
Henderson Group (LSE: HGG.L - news) (HGG) 148.00p +2.92%
Jupiter Fund Management (JUP) 321.70p +2.62%
Soco International (LSE: SIA.L - news) (SIA (SES: E1:C6L.SI - news) ) 383.30p +2.60%
Dialight (DIA (Stuttgart: A1JBEM - news) ) 1,117.00p +2.38%
Invensys (ISYS) 351.60p +2.33%

FTSE 250 - Fallers
New World Resources A Shares (NWR) 292.50p -7.82%
Imagination Technologies Group (IMG) 435.30p -6.37%
CSR (CSR (LSE: CSR.L - news) ) 357.30p -5.02%
Ocado Group (Other OTC: OCDGF - news) (OCDO) 84.10p -4.43%
Spirent Communications (Other OTC: SPMYY - news) (SPT (Taiwan OTC: 8431.TWO - news) ) 149.20p -4.36%
Cable & Wireless Communications (LSE: CWC.L - news) (CWC) 37.72p -4.26%
Savills (SVS) 457.50p -3.68%
Domino Printing Sciences (Other OTC: DMIPY - news) (DNO) 628.50p -3.01%
Ferrexpo (FXPO) 267.40p -2.90%
PayPoint (PAY) 838.00p -2.78%

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