RAMSEY CROOKALL Morning Report 27th October 2011

The FTSE 100 continues to rise strongly. It's no surprise that banks lead the upside after European leaders agree on bank recapitalization measures and Greek debt haircuts.

Although the focus is firmly on the European debt plans, there have also been strong earnings news. Royal Dutch Shell, William Hill and Virgin Media are all up rising following well-received results.

The Eurozone and the Institute for International Finance (IIF) have agreed on a voluntary ‘haircut’ on Greek debt of 50%, which is expected to allow the country to reduce its stock of debt to 120% of GDP by the year 2020 from 160% now. As well, the Eurozone will offer €30bn in credit enhancements to the private sector in exchange.

An agreement has also been reached on increasing the size of the European Financial Stability Fund. The amount remaining, following aid payments so far to periphery nations, and which is approximately €290bn, will be leveraged by around 4-5 times, producing a headline figure of around €1tn.

UK lenders Barclays, Royal Bank of Scotland and Lloyds and mining peers Xstrata, Rio Tinto and Kazakhmys, all saw their share prices jump over 5%. Investors seemed to take no notice that Kazakhmys this morning reported falling output and grades across all its metal groups in the third quarter.

Royal Dutch Shell reported that it had doubled its earnings in the third quarter. However, the shares rose by just 1%, underperforming on a relative basis to the FTSE 100, after reporting that output was slightly lower.

Pharmaceuticals giant AstraZeneca's rise was also rather subdued, at just 0.5%, after it reported that revenues fell 2% at constant currency in the third quarter.

Laird rose strongly on the FTSE 250 after announcing that revenue from continuing operations rose by 18% in the third quarter, as it attempts to shake off its underperforming businesses.

THE FTSE 100 at 10:00                              Up          103       @         5656 THE DOW JONES closed                               Up          162       @         11869      NASDAQ COMP closed                                 Up          12        @         2650               Commodities Spot Gold $/Oz           $1708                           Down               0.96 %     Brent Crude Oil          $109.99                         Up                 0.47 %

Exchange Rates GBP – USD               1.5988 GBP - EURO              1.1425

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