London - Britain's top share index edged lower on Thursday as a temporary fix to the United States' debt issues underwhelmed investors, although media group BSkyB outperformed after posting higher sales.
A last-minute deal to lift the US debt limit paved the way for the US government to re-open after more than two weeks, but it secured funding only until Jan. 15 which raised the likelihood of another round of political brinkmanship.
The blue-chip FTSE 100 slipped by 0.1 percent, or 9.02 points, to 6,562.97 points in mid-session trade, hovering just below one-month highs. The index remains up by 11 percent since the start of 2013.
“The market's muted reaction to the news can be interpreted as a general feeling that rather than solving the underlying problem, the US government has merely extended the time it has to tackle the issue,” said Saxo Bank trader Adam Seagrave.
BSkyB bucked the market fall with a 5.8 percent rise that pushed the stock to a near 12-year high, as analysts homed in on the fact that its revenue rise showed BSkyB had managed to fend off challenges to its sports offering from rival BT.
Some traders said the FTSE's decline would provide a good opportunity to step in to buy up equities on the cheap.
They argued that despite the clouds cast by the US debt situation, many fund managers still had little choice other than to buy up equities due to the higher returns on offer from the stock market than the bond market, where returns have been hit by injections of liquidity by world central banks.
“Fund managers cannot afford to miss the rally,” said Toby Campbell-Gray, head of trading and risk at Tavira Securities.
JN Financial trader Rick Jones said he was targeting a year-end rally for the FTSE which would push the index up to the 6,900-,7000 point range.
“We've not been shorting the market at all, we've been extending long positions. We welcome dips and we've been buying into them,” said Jones. - Reuters