BlackRock says some shares still cheap

By Laurence Fletcher

LONDON (Reuters) - Equity market valuations are still cheap in spite of the recent rebound, but investors can expect more volatility for the rest of this year, says top-rated BlackRock UK fund manager Mark Lyttleton.

"Stock market valuations look quite attractive. You can buy a number of companies on single-digit p/es (price/earnings ratios) with nice dividend yields," he said at a briefing on Tuesday.

Stocks among the top 10 positions in Lyttleton's 1.5 billion-pound BlackRock UK Absolute Alpha fund include Tesco (TSCO.L), Vodafone (VOD.L) and BAE Systems (BAES.L).

He said many companies are now in a stronger financial position than they were six months or a year ago.

"Some companies we've been buying, the stock market has said 'you're going bust and the credit markets are closed' and the share price has fallen 90 percent," he said.

"Actually the credit markets aren't closed and companies can do rights issues and restructure balance sheets."

Britain's FTSE 100 .FTSE share index fell by almost a third last year on fears of a prolonged economic downturn.

However, since hitting a low on March 9 it has risen by around a quarter on hopes that government stimulus moves may revive economies sooner than previously expected.