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Britain's FTSE pares most gains as central bank holds back on stimulus
March 7, 2013 / 5:11 PM / in 5 years

Britain's FTSE pares most gains as central bank holds back on stimulus

* FTSE 100 adds 0.2 percent
    * Index comes off intraday high as BoE holds policy
    * Earnings reports and good Spanish bond auction help rise
    * Index poised to continue upward trend - technicals

    By Alistair Smout
    LONDON, March 7 (Reuters) - Britain's blue chip shares rose
on Thursday but shed most early gains after central banks held
firm on their monetary policy, confounding some investors' hopes
of further easing.
    Cyclical stocks, which rise and fall with investor
confidence about the economy, gained after heavily indebted
Spain hit the top end of its fund-raising target in a bond sale
on Thursday. 
    However, the UK's blue chip share index came off an intraday
high of 6,459.68 after the Bank of England decided against more
stimulus for Britain's ailing economy. 
    "Traders were expecting a little bit more from the Bank of
England, maybe increasing the size of the asset purchase
programme. We didn't get anything on that front, and stocks have
traded sideways since then," Manoj Ladwa, head of trading at TJ
Markets, said.
    The European Central Bank also left policy unchanged.
However, ECB President Mario Draghi contributed to a volatile
afternoon of trade in European shares when he was non-committal
as to whether he felt equity markets were fairly priced at
current lofty levels. 
    "While they aren't increasing stimulus, central banks are
still maintaining their liquidity programmes, and it is a
liquidity-driven market. Earnings are also coming in better than
expected," Ladwa added, saying he expected equity markets to
push higher in the coming days.
    The FTSE 100 closed up 11.52 points, or 0.2 percent,
at 6,439.16, having faltered at the 6,460 level - a five year
high - for the second day running. 
    Impressive earnings reports on Thursday came from Aggreko
 among others. Shares of the world's biggest temporary
power provider jumped 14.5 percent after the company raised its
dividend by 15 percent following an 11 percent rise in 2012
pretax profit. 
    Engineer IMI shares also rose, by 5 percent, after
the company announced results and a plan to buy back up to 175
million pounds ($263 million) of its shares over the next 12
months. 
    With nearly two-thirds of the FTSE 100 having reported
annual results, 68 percent of them have beaten or met
expectations, according to Thomson Reuters StarMine data.
    Earnings newsflow was not all in one direction, however.
    Life insurer Aviva, tumbled 12 percent after it cut
its dividend by over a quarter to provide extra funds for a
turnaround strategy aimed at bolstering capital and profit.
 
    The cyclical sectors of basic materials, which includes
heavyweight miners, financials and energy, combined to add more
than 18 points to the FTSE 100 index.
    While the Dow Jones index continues to set fresh all
time highs on Wall Street, London's FTSE 100 remains around 4.5
percent off records struck in 2007, and was rangebound between
6,200 and 6,400 for much of February.
    "The FTSE 100 consolidated for much of February in a
sideways range with support from swing-point lows around 6,250
and has now reasserted from the four-month uptrend line,"
Dominic Hawker, technical analyst at Messels, said.
    "The majority of constituent stocks are participating in
this rally. It still looks bullish to me."    

 (Additional reporting by David Brett; Editing by Susan Fenton)

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