FTSE tests support before edging higher
LONDON (Reuters) - The FTSE 100 edged up on Tuesday after a choppy day as the index managed to consolidate above 6,100 despite testing support with concerns weighing over the U.S. debt ceiling and growth in Europe.
The FTSE 100 twice dipped below the 6,100 level, but recovered both times following weakness in early and midday trade.
The index closed up 9.45 points, or 0.2 percent, at 6,117.31, having been down as much as 0.4 percent, but was still 0.3 percent lower than the new 4-1/2 year high of 6,133.41 posted in Monday's trade.
"The FTSE 100 index has pushed above the previous high area around 6,105 - the 2011 high - calling for further advance," Nicolas Suiffet, technical analyst at Trading Central, said.
"Despite the positive weekly indicators, the momentum seems to fade away and a consolidation could occur in the short term ahead of a new up-leg."
Burberry Group led blue chip gainers, adding 4.6 percent after the British luxury brand posted a 9 percent rise in third-quarter underlying revenue.
"Given the concerns surrounding the brand since the profit warning, this acceleration should support sentiment in the shares," BofA ML said in a note, raising its rating to 'buy' from 'neutral', and upgrading its earnings forecasts by up to 4 percent.
Tuesday's share price hike in early trade has restored Burberry to levels last seen in September, just before it shed over 20 percent after issuing a profit warning.
Despite trading at a relatively high forward 12-month price-to-earnings multiple of 17.9, top-rated analysts in the sector expect Burberry to post a positive earnings surprise of 1.6 percent over the next 12-months, second only to Swiss watch-maker Swatch among peers, according to Thomson Reuters Starmine data.
Despite the broader index's gains, made as the final deals of the day were finalised, miners reversed early strength to close 0.4 percent lower.
Sentiment was hit as the German economy shrank by 0.5 percent in the fourth quarter of 2012, contracting more than at any point in nearly three years as traditionally strong exports and investment slowed.
"The growth worries are creeping back in, especially with Germany's GDP figures today," Mike Ingram, analyst at BGC Partners, said, adding that he thought bullishness on equities could be maintained for the first half of the year before weighing more substantively in the latter half.
"I still think there's a positive tone ... but the continuous commentary on the debt ceiling is also unsettling things, and it does look as though Obama is being quite combative on this," Ingram added.
On Monday, President Barack Obama rejected any negotiations with Republicans over raising the U.S. borrowing limit, accusing his opponents of trying to extract a ransom for not ruining the economy in the latest fiscal fight.
The row over the debt ceiling helped to take the copper price to two-week lows, affecting miners.
Anglo American led the sector lower, losing 3.7 percent after plans for its platinum arm to shed 14,000 jobs in South Africa were met with threats of strike action, risking a repeat of last year's violent unrest.
(Additional reporting by David Brett; editing by Stephen Nisbet)
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