LONDON: Britain's top share index was higher on Tuesday morning, continuing to claw back recent hefty losses and helped by a rebound from banks and strength in the mining sector.
Traders and money managers, however, were cautious about the FTSE 100's near-term progress while uncertainty remained about Greece's debt crisis.
The FTSE 100 was up 17.30 points, or 0.3 percent, at 5,880.46 by 0832 GMT, having added 0.1 percent on Monday. The index fell 1.4 percent last week, pressured by gloomy US data.
Banks were in demand, recovering their poise after declines in the previous session, led higher by Lloyds Banking Group, up 1.6 percent.
Upbeat broker comment helped heavyweight HSBC climb 0.2 percent, with Goldman Sachs repeating its "conviction buy" rating on the stock, saying the market was underestimating the impact of the bank's mix shift towards growth markets.
Barclays added 0.2 percent after a ruling by the Federal judge overseeing the Lehman Brothers bankruptcy case.
The trustee for the brokerage arm of Lehman Brothers Holdings Inc was entitled to $4 billion in margin assets that have been the subject of the long-running legal fight with Barclays, a bankruptcy judge said.
"It is very hard to work out what has already discounted in the share price by investors, but if this draws a line under Barclays's Lehman legal exposure, it ought to be taken positively," Seymour Pierce said in a note.
Sticking with financials, Resolution was the top FTSE 100 riser, up 2.8 percent, after the insurance consolidator said it will return 500 million pounds surplus cash to investors, prompting Investec Securities to repeat its "buy" rating and place its 636 pence target price under review.
"It seems the market is forming a bit of a base on the 200-day moving average (5,800 level) at the moment. I do not think there is a lot of strength to move it significantly better than that at the moment," Martin Dobson, head of trading at Westhouse Securities, said.
"The Greece situation is probably getting a little bit pushed towards the background given the IMF story about them meeting the criteria ... but I think the problem is still there, and it will be an underlying factor for the summer.
Greece has made progress in tackling its debt crisis but cannot afford to relax the pace of reforms, the International Monetary Fund's senior representative in Greece told a banking conference.
"I am still very worried about the Greek situation. I think a default is inevitable," said Lex van Dam, hedge fund manager at Hampstead Capital, which has $500 million of assets under management. "It will take a few weeks to play out but I see no reason to take any unnecessary risks right now and I would wait before loading up with stocks right now."
Miners added the most points to the blue-chip index, building on the previous session's gains, with traders citing bargain-hunting.
Anglo American and Rio Tinto, up 0.5 percent and 0.8 percent respectively, have both recently been trading below their 200-day moving averages.
Burberry was another strong blue-chip gainer, adding 2.1 percent, as traders pointed to a French press report pointing to bid talk within the sector.
French retailer and luxury goods company PPR is in talks to make a large acquisition in the luxury sector, La Tribune reported, citing an unnamed internal source.
Whitbread, meanwhile, was a big faller, off 1.4 percent, after Barclays Capital downgraded its rating for the leisure firm to "equal-weight".
Copyright Reuters, 2011
Comments
Comments are closed for this article.