By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- The U.K.'s FTSE 100 index advanced on
Monday as heavyweight oil firms climbed, partly offsetting worries
about the debt impasse in the U.S. But banks added pressure on the
political worries and after a downbeat broker note on the
sector.
The benchmark index rose 0.3% to close at 6,507.65, ending
higher for a third straight trading day.
Oil firms helped lift the London index as oil prices moved
higher. Shares of Royal Dutch Shell PLC (RDSB) added 0.5%, BP PLC
(BP) gained 0.9% and BG Group PLC rose 1.3%.
The gains came as the continued political stalemate in the U.S.
dented investing optimism globally. Senate leaders over the weekend
tried to broker a deal to reopen government -- now on shutdown Day
14 -- and to avoid bumping up against the debt ceiling on Oct. 17,
but appeared to struggle to break the deadlock.
Heavyweight Vodafone Group PLC (VOD) gained 0.8% after the
telecom firm said it completed the takeover of Kabel Deutschland
Holding AG .
Banks were among decliners, with shares of Royal Bank of
Scotland Group PLC (RBS) off 1.4%, Lloyds Banking Group PLC (LYG)
down 0.5% and Barclays PLC (BCS) 0.4% lower.
Analysts at Bank of America Merrill Lynch on Monday said they
are now less positive on U.K. banks, owing to share price
performance, the fact that margins look set to peak during the
first half of next year and concerns in the pipeline over capital
demands from the U.K. banking supervisor. Merrill cut Royal Bank of
Scotland to underperform and removed Lloyds from its Europe 1
list.
Among other fallers, shares of Diageo PLC (DEO) gave up 1% after
Investec Securities analyst Martin Deboo cut the spirits maker to
sell from hold.
"This reflects concern on top-line progress relative to
guidance, risks from [emerging markets] following Unilever's
warning, and what we think is a still-subdued recovery in the USA,"
he said.
In the same vein, Croda International PLC recovered from an
earlier drop of close to 3%, to gain 1.3%. J.P. Morgan Cazenove cut
the specialty-chemicals firm to neutral from overweight, as "a
combination of negative currencies and over-optimistic consensus
could lead to disappointment in the short run."
Johnson Matthey PLC climbed 5.9% after J.P. Morgan Cazenove
lifted the chemicals firm to overweight from neutral. The analysts
said they "expect years of investment in the industrial-catalyst
market to lead to accelerated growth, benefiting from the swathe of
new-customer capex, driven by Chinese petrochemical
self-sustainability and the U.S. shale gas revolution."
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