London - UK shares inched closer to multi-year highs on Monday, led higher by mining stocks after robust Chinese economic data in the wake of encouraging US jobs figures.
Miners exerted the most upward pressure on the UK benchmark, up 0.8 percent, after trade data out of China added weight to the view that the global economy is recovering, with exports gaining steam in May.
“The UK market is underpinned by stronger export orders out of China which will offset fears about low global iron ore prices for the miners - an important sector for the FTSE,” Lex van Dam, hedge fund manager at Hampstead Capital, said.
The FTSE 100 was up 14.00 points, or 0.2 percent, at 6,872.21 points by 09:54 SA time, leaving it just 0.3 percent shy of a peak hit last month of 6,894.88 - its highest level since December 1999.
The index has been coming up against resistance around 6,880, but Charles Stanley technical analyst Bill McNamara said it no longer looks overbought, which “implies that it might be able to push higher in the near term”.
Charts showed that the 14-day relative strength index (RSI) for the UK benchmark was at about 59 after rising last month to around 70, a technically “overbought” market condition that often results in a pullback.
Alpari analyst Craig Erlam also saw scope for more gains. “Should we see a break above the 29 May highs of 6,882, it would suggest the grind higher is not over, while a break above 15 May highs of 6,894 would further support this,” he said.
Lloyds Banking Group bucked the slightly firmer market trend, dropping 1.4 percent and making it the top FTSE 100 faller.
The bank said it would sell a quarter of its shares in TSB through a listing on the London stock market priced at 220-290 pence per share, which is below the business's book value.
The price reflects a cooling of investor interest in UK company flotations in recent weeks following a rush of activity earlier in 2014.
Clothing chain Fat Face pulled its planned London listing last week while shares in insurance-to-holidays firm Saga have fallen below their IPO price.
“I am feeling these IPOs are starting to grow weary on investors. The recent SAGA failure is no exception and to price in at the bottom of the range presents a double-edged sword. On the one hand it makes it appealing and on the over hand it makes me ask the question 'Why'?” Galvan's head of trading Ed Woolfitt, said.
“Bearing in mind Lloyds need to make the disposal as they are obliged it may be just a case of them making sure it is fully subscribed.” - Reuters