Britain's FTSE edges higher, led by Weir

20 Dec, 2012

 

The FTSE 100 was up 5.76 points, or 0.1 percent, at 5,967.35 by 0954 GMT, edging back towards a nine-month high of 5,977.82 hit during the previous session.

 

Sentiment towards riskier assets turned negative overnight, hurting US shares, as talks to avoid a "fiscal cliff" of planned tax hikes and spending cuts due to take effect at the start of 2013 have stumbled yet again. Most investors expect a deal will be struck, but delays could lead to volatility in the index, particularly given the thin trade ahead of the holidays.

 

"The fiscal cliff is a reality and I believe that markets have got themselves into a hopeful state rather than a realistic state and would be wary of further declines," said Gerard Lane, equity strategist at Shore Capital.

 

Traders said that the index will struggle to break through the 6,000 level, which has acted as a resistance level twice since July 2011.

 

"I don't think there's the appetite for traders to get long. You've got this big barrier at 6,000... I think the fiscal cliff is definitely going to be a 'sell the fact'," Joe Rundle, head of trading at ETX Capital, said, referring to price falls after an event that was expected to be positive.

 

"I think the risk-reward is a 40-point upside and a 200-point downside; there's no real incentive to get involved at these levels," Rundle said.

 

UK shares showed little reaction to news that British retail sales unexpectedly failed to grow last month, raising doubts about the economy's health towards the end of 2012.

 

Weir Group topped the FTSE 100 leader board, rising 2 percent, as the market reacted positively to the engineer's purchase of US oil equipment firm Mathena for an initial consideration of $240 million.

 

"This deal looks to have good long-term prospects and makes Weir a sizeable player in surface pressure control equipment and service for the upstream onshore unconventional market," Investec Securities said in a note, lifting its target price for Weir to 2,100 pence.

 

Elsewhere, outsourcing firm Serco added 0.4 percent after issuing an in-line trading update.

Center>Copyright Reuters, 2012

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