London - Bullish updates from some of the largest global companies helped keep the FTSE 100 in positive territory early on Thursday, but the index remains restrained by economic uncertainty in the United States.
Tui Travel, the world's largest tour operator, rose 2.6 percent after it increased the profit outlook it gave only seven weeks ago.
Compass Group, the world's biggest caterer, which climbed 1 percent after it said it expected revenue growth of 4.5 percent for the full-year after a strong year of contract wins in its core North American market.
Tullow Oil rose 1.4 percent after announcing it made a new oil discovery at its wildcat well in northern Kenya.
Worries, however, persist over earnings, which largely remain in downgrade territory and have failed to keep up with the recent re-rating in stocks: the FTSE 100 trades on a price-to-earnings of 12.2 times, just above its ten-year average, according to Datastream.
William Hill fell 2 percent after peer Ladbrokes , Britain's second largest bookmaking group, warned profit from its online operations would fall well short of expectations, the latest in a series of setbacks for the company.
By 09:14 SA time, the FTSE 100 was up 2.84 points at 6,554.37, having bobbed around in a tight range since mid-July, between 6,400 and 6,650, with markets acutely aware of debt wrangling and economic stimulus uncertainty in the United States, which could curtail a fragile global economic recovery.
Investors were worried about two looming Washington deadlines: before October 1 Congress needs to pass stop-gap funding for federal agencies and by October 17 it must raise the federal borrowing limit to avoid a debt default by the United States.
European markets, most of which are at multi-year highs, remain stunted since Federal Reserve president Ben Bernanke surprised investors by not starting to wind down economic stimulus last week.
“It is difficult to second guess Bernanke but we need to be alive to the fact that yields are rising and tapering will occur at some point,” Nick Mustoe, Chief Investment officer of the global equity income fund at Invesco, said.
Mustoe said he still sees value in UK and European stocks, with the core of his portfolio in consumer discretionary, which have been the biggest outperformers since 2010, and pharmaceuticals, but he is adding judiciously to his position in financials.
From a technical standpoint the FTSE 100 has some downward support targets at 6,434 and 6,393, which Steve Ruffley, chief market strategist at InterTrader, said needs to be tested before the bulls and value hunters come back into stocks.
“If (US figures out this week) are not game changers all the indices will grind down until the non-farm payrolls, which may lead people to decide once again make trade calls on when the Fed will announce tapering,” he said.
In the United States the final reading of second-quarter GDP and weekly jobless claims are set for release at 14:30 SA time. - Reuters