UK shares edge higherComment on this story
Britain's top stocks edged higher on Tuesday after a sell-off the previous day, supported by defensive shares as muted expectations for this week's European Union summit kept a lid on gains.
At 09:32 SA time, the FTSE 100 index was up 14.27 points or 0.3 percent at 5,464.90. The UK blue chip index fell 1.1 percent on Monday, its lowest close in nearly two weeks and its biggest daily fall since June 1.
Pharmaceutical shares were in demand on Tuesday, with Shire rising 2.5 percent as Societe Generale and Berenberg upgraded the stock to “buy”.
Miners, up 0.5 percent, also featured among the top gainers, mirroring gains in copper, which rose on a weaker dollar and short covering. Energy shares were up 0.4 percent.
Market jitters ahead of the June 28-29 summit capped gains.
“Investors are clearly nervous ahead of the summit and the banking sector is still under pressure with no lasting solution to the euro crisis,” Jeremy Batstone-Carr, head of private client research at Charles Stanley, said.
“With (last week's) global PMI data pointing to yet lower future activity, we continue to advise clients to take any profits on rallies, stay defensive and not to be fooled into buying the dips.”
At the summit, European leaders are set to discuss specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund.
“Hopes are that this week's EU summit will produce some progress of federalising the euro zone, but getting 17 different groups of politicians to agree on any subject would be hard enough,” Darren Sinden, senior sales trader at Silverwind Securities, said.
German Chancellor Angela Merkel dashed any lingering hope that Europe would issue common euro zone bonds to help indebted countries, calling such an idea “economically wrong” and “counterproductive.”
“Investors could look at good dividend payers with a strong balance sheet,” Sinden added.
Among individual movers, Petrofac rose 2.4 percent to feature among the top gainers after the company said it remained on course to deliver net profit growth in 2012 of at least 15 percent.
Croda International advanced 3 percent after JP Morgan raised the stock to “overweight” from “neutral” and increased its price target to 2,600 pence from 2,220.
British online supermarket Ocado fell 7.1 percent after saying trade in its third quarter was disrupted by celebrations to mark Queen Elizabeth II's Diamond Jubilee as it posted a 4.5 percent rise in underlying first half earnings. - Reuters