FTSE stalls near five-year highs

Reuters.

A trader monitors the screen on a trading floor in London.

London - Britain's blue chip shares rose on Tuesday, as policymakers' comments and solid company reports took it towards five-year highs, but it was unable to sustain a break above a key resistance level.

Financials and miners added the most weight to the FTSE 100 as the world's two biggest economies reiterated steps they would take to support economic growth.

The US Federal Reserve's vice chair Janet Yellen stood firmly behind the use of continued aggressive monetary policy, while China reaffirmed its 7.5 percent growth target, supporting appetite for riskier stocks overnight and into early trade in Europe.

European and British business sentiment surveys came in ahead of expectations, also helping sentiment.

However, the FTSE 100 did not quite touch five-year highs set in February, and was unable to sustain a break above 6,400, leaving it stuck at the top end of a recent six-week range.

“Newsflow not just in the UK but elsewhere has been supportive today,” Jeremy Batstone-Carr, analyst at Charles Stanley, said.

“I'm still wary though. I'm not convinced that at these kinds of levels investors should necessarily be buying into the pro-cyclical growth story.”

Miners rose 1.8 percent, one of the so-called “cyclical” sectors which rise and fall with optimism over the economy.

The FTSE 100 was up 42.08 points, or 0.7 percent, at 6,387.71 by 13:45 Sa time, off a five-year peak of 6,412.44 struck on

February 20, with financials, a broad-based sector including banks, asset managers and insurers, adding 11 points to the index.

Heavyweight blue-chip bank Standard Chartered rose almost 2.6 percent after the bank delivered its 10th successive rise in yearly profit, bucking a trend in the UK banking sector, which has seen mostly disappointing results.

StanChart said it had started this year with strong momentum and was confident for the year ahead.

“[It's] a refreshing report following the horror shows from RBS and Lloyds,” Marc Kimsey, senior trader at Accendo Markets, said in a trading note.

“Standard Chartered should be the cornerstone of any long-term portfolio.”

RELEGATION BATTLE

The day's top movers all face potential demotion from the FTSE 100 at the close of play on Tuesday, with dramatic price movements potentially keeping previously under-threat stocks in the blue-chip index.

The quarterly index review will be announced after the market close on Wednesday but changes will be based on Tuesday's closing prices.

Outsourcer Serco, which had been set for relegation from the FTSE 100, jumped 8.8 percent after it relaxed its payout policy and ramped up its total dividend by 20 percent year-on-year as part of a forecast-beating full-year report.

As things stood, it had overtaken Intu Properties in rankings of size by market capitalisation.

If this was maintained heading into the close, Intu rather than Serco would lose its blue-chip status.

Intu was one of only a few fallers on the FTSE, sliding 1.3 percent - the biggest drop on the index.

John Wood Group advanced 7.4 percent, as the relegation-threatened energy services firm also posted stellar results, including a 35 percent jump in profits.

However, having fallen behind Serco in size in recent days, Wood Group would only be saved from demotion if mid-cap London

Stock Exchange, up 2.3 percent, dropped below 90th position and so missed out on automatic promotion. - Reuters