UK's FTSE moves to new highsComment on this story
Britain's benchmark share index rose to its highest level in more than four years on Friday, as investors overlooked domestic economic weakness to snap up mining stocks exposed to the growing Chinese economy.
Technical analytical indicators showed that even though the rally could stall in the near-term, the longer-term picture remained bullish, with many forecasters expecting the blue-chip FTSE 100 index to rise over the course of 2013.
The FTSE 100 was up by 0.5 percent, or 32.92 points higher, at 6,165.28 points by around midday - a fresh peak for 2013 and its highest level since around mid-2008.
Mining stocks dominated the FTSE 100 leaderboard.
Evraz rose 4 percent and the FTSE 350 mining index gained 0.8 percent, after growth in China - the world's top metals consumer - beat expectations in the fourth quarter of 2012.
Traders focused on the overall picture for a growing global economy rather than fresh signs of UK economic weakness, after official statistics showed a drop in British retail sales, which hit sterling on the foreign exchange markets.
“The market movement here is driven far more by China and the US than the UK High Street,” said Thurleigh Investment Managers fund manager Edward Allen.
Hartmann Capital trader Basil Petrides said he would hold “long” positions on mining stocks - which account for much of the weighting on the FTSE 100 - to bet on further gains on the sector.
“China's looking good. You've got to be a buyer of the miners when they dip,” he said.
Thurleigh, which manages around 270 million pounds of assets, sold a position on the FTSE 100 at around 6,030 points at the start of January and would look to next sell the FTSE 100 if it rose to around 6,250 points, said executives at the firm.
Technical indicators showed the possibility of the FTSE 100 gaining more ground, even if the index looked “overbought” according to some technical analysis indicators.
The FTSE 100 currently has a relative strength indicator (RSI) reading of 72 points - just above the 70 point RSI level which shows that an index is “overbought” and is often used by traders as a sign to sell in the near-term.
However, the index also remains above both its 200-day and 50-day simple moving average levels, which many traders have used as a sign that the FTSE 100 could rise further in the months to come. - Reuters