UK shares trade flatComment on this story
UK shares traded flat on Monday, holding near four-months highs on hopes of action to contain Europe's debt crisis, despite falls in heavyweight mining shares as traders sought to interpret new economic data from China.
Miners shed 0.4 percent, with traders saying a rise in Chinese home prices had dented investor expectations of further interest rate cuts by the world's largest consumer of metals.
“Stronger than expected Chinese housing data has traders worried that China won't be lowering rates and cutting reserve rates as much and as quickly as previously hoped, making a recovery of the overall economy not necessarily unlikely, but (it) might be taking much longer than expected,” Markus Huber, a senior trader at ETX Capital, said.
Miner Eurasian fell 2.3 percent to the bottom of the FTSE 100 index, which was flat at 5,850.73 points by 10:21 SA time.
The index stayed near the four-month closing high of 5,864.78 points it hit last week on expectations euro zone leaders are closer to acting to stem the region's crisis, with German Chancellor Angela Merkel last week supporting European Central Bank head Mario Draghi over his pledge to defend the euro.
A German magazine report over the weekend that the ECB is considering setting interest rate thresholds for purchases of euro zone bonds reinforced that view.
But technical charts on the index pointed to fading buying momentum after the FTSE recorded weekly gains in nine of the last 11 trading weeks.
“Upside momentum has slowed considerably with the index making only a weekly high-to-high gain of 16 points (last week),” James A. Hyerczyk, an analyst at Autochartist, said in a note.
“This could be an indication of an overbought market. Since many 'short' traders have been taken out by the recent rally, investors are now being asked to pay up for shares.” - Reuters