London - The UK's leading shares held onto gains by midday Thursday, boosted by heavyweight BP which won a rare legal battle related to its oil spill in the Gulf of Mexico, but US debt worries continue to dent the index's momentum.
Energy firm BP - the UK's fifth biggest company by market capitalisation - rose 0.9 percent after it won a legal reprieve in a settlement related to the 2010 Gulf of Mexico oil spill, potentially sparing the oil company billions of dollars of extra costs.
More broadly the FTSE 100, which was up 14.12 points at 6,451.62, by 12:31 SA time, has remained stuck in a 200-point range since the start of August.
“At the moment there is no incentive to make investment decisions given the backdrop,” Keith Bowman, analyst at Hargreaves Lansdown, said
“Investors are trying hard not to become flustered and panicked by what is happening in the background but is there really any incentive to make new investments?”
The index has back-tracked since hitting 13-year highs in May and is 5.6 percent off that level as investors wait for corporate earnings, which are still in downgrade territory, to catch up with the index's re-rating.
The FTSE 100 trades on a 12-month forward price-to-earnings ratio around 13 times, above its 10-year average.
“We went below 6,400 and bounced from yesterday's lows, and since then we've had rising lows, which is good to see,” Mike van Dulken, head of research at Accendo Markets, said.
“But for a breakout, we need to get back towards 6,520 ... (The index is) still under pressure, and we might stay in a range until we get something major from the US to get sentiment going again.”
Equity markets have been capped by the budget deadlock that has shut parts of the US federal government and there was no breakthrough in negotiations on Wednesday.
Some British stocks still managed decent gains, with insurer Aviva up 1.4 percent after the sale of its US unit fetched $800 million more than expected.
Tesco rebounded 1 percent and was the second most heavily traded stock after mixed broker coverage after Wednesday's report of a plunge in profits prompted big falls in that day's session.
Traders said that an upgrade to the stock by Citi to “neutral” from “sell” was helping to counteract downgrades from elsewhere.
“There were very few points of light in Tesco's results... so why upgrade now? Simply stated, we fail to see much misperception about the company,” analysts at Citi said in a note. - Reuters