Friday, 30 November 2012 17:58
LONDON: Britain's leading shares pushed higher on Friday, extending recent gains as the index looked to end a volatile November at its highest levels for six weeks.
Even with the UK blue chip index having swung through a near 200-point range during the month, commentators were fairly sanguine on the prospects for December.
"The UK market is ending the month on a very firm note trading close to the highs of the year and not far from a 4 year peak," Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million of assets said.
"From a technical perspective we are looking very healthy, having tested the downside earlier this month and bounced back, with further gains likely. Fundamentals however, in the form of company earnings, do not confirm this," van Dam added.
At 1221 GMT, the FTSE 100 was up 12.59 points, or 0.2 percent at 5,882.59, near its closing peak for the month of 5,884.90 recorded on Nov.6, with a 6-week high of 5,896 eyed, having jumped 1.2 percent on Thursday.
After recording its best weekly performance of the year last week, with a 3.8 percent jump, the UK blue chip index was up a more modest 1.0 percent over this week's five sessions, having only fallen back on Monday, and was on course to post a monthly gain of 1.7 percent, its sixth consecutive month of gains.
Thursday's strong gains were triggered by optimism about a US budget deal to avert planned tax rises and austerity measures from January which could push the world's biggest economy into recession.
However, having initially sparked that optimism, US House of Representatives Speaker John Boehner then poured cold water on those hopes after the European market close on Thursday, with negotiations between Congress and the US President continuing.
"This game of brinkmanship played in Washington dents the possibilities of a Santa Rally to end the year," Ishaq Sidiqi, market strategist at ETX Capital said.
Banks led the UK blue chips advance, recovering from earlier falls bolstered by a 1.1 percent gain by global heavyweight HSBC, with Barclays rallying 0.9 percent helped by a hike in target price from UBS.
The broker stayed "neutral" on the sector, however, saying that while tail risk is reducing around the UK banks, with capital positions robust, the recent performance by their stocks leaves upside modest.
Falls by Royal Bank of Scotland weighed as well, with the part-state-owned lender shedding 1.2 percent as the Daily Telegraph reported that it could be forced to explore the sale of core businesses after the Bank of England increased the pressure on lenders to raise new capital.
Separately, the bank said the sale of its Indian Retail & Commercial banking operations would not proceed.
Among other blue chip fallers, Kingfisher extended its declines after disappointing Q3 results on Thursday, down 0.4 percent as UBS cut its rating for Europe's biggest DIY retailer to "neutral" from "buy".
But positive broker comment fueled gains in testing and inspection firm Intertek, up 1.4 percent after Berenberg Bank raised its recommendation to "buy" from "hold" in a UK support services review.
Outsourcing firm Capita was also in demand, ahead 1.6 percent, as Berenberg started coverage on the stock with a "buy" rating in that review.
Copyright Reuters, 2012