Stockbrokers reveal their picks for investment in 2011 and sound cautious note

OIL, energy and mining companies will make the strongest gains in 2011, according to a new poll of brokers at Yorkshire stockbroker Redmayne Bentley.

The firm's brokers also predicted that pharmaceutical and technology companies will do well. They picked general retailers, housebuilders, property and industrial companies as sectors to avoid.

Bank shares split opinion, with some brokers picking them as ones to watch, while others said they should be shunned.

The survey also showed brokers believe that monetary policy will remain loose with interest rates continuing to stay low. European sovereign debt, political upheaval caused by austerity measures and higher inflation were all causes for concern.

Allan Collins, investment consultant at Leeds-based Redmayne Bentley, said investors had regained some of their confidence following tensions over the Irish financial crisis and the turmoil on the Korean peninsula.

"Earnings growth, one of the main drivers of share prices in 2010, should continue and strong balance sheets will promote higher dividend payments and new share buy-back programmes, as well as a rise in takeover activity."

He said there are risks to an optimistic view of next year, however, because continued problems, particularly in Europe.

"We are in the centre of a decade long crisis in the financial system which has still to run its course – European sovereign debt will undoubtedly provide ongoing concerns.

"One of the dangers for 2011 is the risk of political damage as governments use blunt fiscal austerity measures to reduce deficits.

"That could choke off recovery and result in a year when a rich world struggles with a weak and jobless recovery, and an emerging world growing four times as fast."

The firm named oil giant BP, pharmaceuticals firm GlaxoSmithKline, mobile company Vodafone and life and pensions expert Aviva, which has a major office in York, among its top share picks.

Among those it picked from outside the FTSE 100 are Broadband satellite operator Avanti Communications and Persimmon, the York-based housebuilder.