Stock Picker

Financial shares enjoyed another good week as confidence slowly returned to the market.

Friends Provident was in the spotlight as the group rejected a takeover approach from JC Flowers, the private equity firm interested in purchasing Northern Rock before it was nationalised.

JC Flowers offered 150p a share for FP. The fact that it’s still trading below this level underlines the pessimism that has affected the market. Nevertheless, its shares are worth holding at these levels.

Once again the biggest winners in the marketplace were those stocks that suffered the most in previous months.

The boost to banking stocks stemmed from Swiss bank UBS. Despite revealing that it expects to post a massive Q1 loss of around $12bn due to write-downs of $19bn, investors reacted positively on the grounds that the worst is behind the firm.

That said, the overall scale of banking write-downs has not de-creased and it’s unlikely that UBS will be the last firm to suffer. But at least there are glimmers of light at the end of the tunnel.

John Goodall is a private client research analyst at stock broker WH Ireland.