Banks lead the way

The British banking sector is pushing the overall market higher, after Lloyds announced a strong set of results.

The banking sector is up 1.2% after the partly state-owned Lloyds Banking Group recorded a first-half profit of £2.1 billion compared with a £456 million loss for the same period last year. The share is up 6%. Traders are now looking ahead to tomorrow, when Royal Bank of Scotland will reveal its results.

Overnight the HSBC Chinese manufacturing purchasing managers index (PMI) came in at 47.7, which is in line with expectations. Traders welcomed the news that there was no decline, and mining companies are higher on the back of this.

The eurozone released a positive manufacturing PMI report this morning. The July reading was 50.3, which represents a two-year high. Keeping in mind that the jobless rate also dropped for the first time in two years, this could be a turning point for the region.

In corporate news, BAE Systems stated it expects earnings growth for 2013 to be in excess of 10%, as the defence company hopes to extend a contract with Saudi Arabia and United Arab Emirates. The share price is up 2.8%.Royal Dutch Shell reported a drop in second-quarter earnings of 19%, citing ‘higher costs and exploration charges’ as the cause, and the stock is down 4%.

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