London - Britain's top share index held steady at five-year highs on Tuesday, with strength in leisure firms underpinned by low volatility and a strong technical picture suggesting that the index was poised to scale new peaks.
Travel and leisure firms were the top gainers, rising 1 percent to help bolster the FTSE 100's position above 6,500.
A strong finish on Monday saw the index close above 6,500 for the first time since December 2007.
London's blue chip index was flat, while its volatility fell 8 percent, tracking a fall in US volatility.
The crude gauge of investor nervousness closed below 12 for the first time since 2007 on Monday, meaning investors appear more sanguine than they have since the credit crisis began.
“It appears that it will keep on going higher from here. The VIX is falling every day, which shows that people are not worried about a repeat of the sort of crash we saw last time we were at these lofty levels,” Fawad Razaqzada, market strategist at GFT Markets, said.
“If something negative comes out in terms of economic news, then investors will probably use that as an excuse to close some of their long positions, which could cause a bit of a pullback. But the trend is very strong.”
As of 13:37 SA time the FTSE was effectively flat, up just 2.45 points to 6,506.08, with the contribution of consumer discretionary firms, which include travel and leisure and added 1.3 points to the index, bringing the index into positive territory.
Intercontinental Hotels led leisure firms higher, rising 2.4 percent after UBS upgraded the company to “neutral” from “sell”.
“The market is right to view IHG as a high-quality play on the structural growth of the hotel industry, geared to cyclical recovery,” UBS said in a note, although it added there may be some stock-specific growth issues the market is not taking into account.
Other leisure firms rallied too with Tui Travel up 1.6 percent after UBS initiated coverage on its parent Tui AG with a buy rating. The investment bank was also bullish on restaurant group Whitbread, which gained 1.6 percent.
The biggest individual riser was copper miner Antofagasta, however, which rallied 4.8 percent as it sought to brush off investor worries over growth with a better-than-expected 2012 payout and special dividend.
“Big positive is the final dividend ... In the current 'show me the money' environment for miners, we expect this to be taken well by the market,” BofA Merrill Lynch said in a note.
However, the sector as a whole traded flat, with several miners among the top fallers.
Mexican miner Fresnillo shed 2.5 percent after its 2012 profit slumped 19 percent, while global miner Rio Tinto fell 0.5 percent on reports it has slowed development of its multibillion investment in Guinea's untapped Simandou iron ore deposit and slashed staff.
Fresnillo was second to British Land on the fallers list, with the real estate firm down 4.1 percent after opting to tap the market for 500 million pounds - diluting the value of its shares - to fund new investment and sold off part of its London portfolio.
The announcement from British Land knocked peers such as Land Securities and Hammerson, which fell 1.1 and 0.8 percent, respectively. - Reuters