Banks lift the FTSEComment on this story
London - Britain's benchmark share index rose on Tuesday, lifted by a buoyant banking sector, which gained after Barclays announced a cost-cutting drive and offered a higher dividend.
Barclays rose 5.8 percent, leading FTSE 100 gainers, after unveiling plans to slash annual costs by up to 2 billion pounds by pruning its investment bank and axing at least 3,700 jobs.
The bank raised its dividend and reported a 26 percent rise in adjusted pretax profit for 2012.
It was the most heavily traded stock in the index, with over 1.3 times its 90-day average volume being traded by late morning.
“We still haven't seen the detail, but the news that they've been through a rather forensic analysis of the business over the last six months helps give clarity to the shape of Barclays going forward,” Mike Ingram, market analyst at BGC Partners, said.
“There is a road map there, whereas there was a lot of uncertainty before.”
Lloyds and Royal Bank of Scotland were the second and third biggest gainers, rising 3.7 percent and 2.6 percent respectively, with traders citing readacross from the Barclays news.
“Barclays are transmitting a fairly upbeat message about UK high street banking. They're seeing higher growth there than they are in the investment bank going forward,” Ingram added, saying that both RBS and Lloyds were less investment bank-oriented.
At 14:23 SA time, the blue-chip FTSE 100 was up by 0.3 percent, or 21.53 points higher, at 6,298.59 points, with banks alone adding 17 points to the index.
The sector helped the index return to 6,300 for the first time this week, as it posted an intraday high of 6,303.80.
However, it struggled to sustain any rise above the psychologically important level.
The index rose around 8 percent in January to reach a 2013 peak of 6,354.46 points, before slipping back over the course of February to trade below the 6,300 point mark, with some traders believing the rally has gone far enough for now.
“I'd be looking to take profits at these levels,” said EGR Broking managing director Steven Mayne.
While the 6,300 level acted as a support for the index during January, it has put a cap on the market during February trading so far.
“Since old bottoms tend to become new tops, traders have to pay attention to the action around 6,300,” James Hyerczyk, technical analyst at Autochartist, said in a trading note.
“This price is acting like a pivot. As long as it remains below this level, there is a slight bias to the downside.” - Reuters