LONDON The FTSE 100 index rose on Tuesday, buoyed by some encouraging earnings reports in light trade ahead of what is expected to be a close U.S. presidential election result.
The FTSE 100 was up 45.84 points, or 0.8 percent, at 5,884.90 by the close, remaining within the tight 200-point range it has held since September.
The narrow trading range and thin volumes of recent weeks were both symptoms of the lack of conviction in the market, said Bill McNamara, technical analyst at Charles Stanley.
"I understand the indecision, waiting for the election, but I'm not even convinced that once the elections are out of the way that investors are going to know what to do," he said, citing the failure to sell off markedly after a summer rally.
"What that tells me is that while there might not be too many buyers up at these levels, there clearly aren't a lot of sellers around either, and the impression that I get is that people really are sitting on the sidelines."
Recent polls showed Democratic President Barack Obama edging his challenger, Republican Mitt Romney, in key swing states, with traders and investors wanting a clear winner to the close race by Wednesday morning.
Markets are less concerned about who wins and place more emphasis on their ability to deal with the so-called fiscal cliff, a series of tax hikes and spending cuts totalling $600 billion which will kick in if a compromise over the U.S. budget deficit is not negotiated before the end of year deadline.
"People are going to wait and see what happens in terms of the resolution of the fiscal situation in the U.S. before they do anything, and that to my mind, failing some sort of quick resolution, which seems unlikely, could lead to a period of significant anxiety as we head into the year end," Charles Stanley's McNamara said.
The trading volume of the index was around the average 90 day volume, but was significantly skewed upwards by heavy trade in individual firms which benefited from encouraging results.
Marks & Spencer rose 2.8 percent after the bellwether British retailer beat profit forecasts. Shares in the company have risen 14 percent over the last three months, lifted by persistent takeover speculation.
The UK retail sector is facing significant headwinds, demonstrated by a sharp deceleration of British retail sales in October, according to the British Retail Consortium, but Marks & Spencer is seen as having prepared itself well for the future.
"The support for the shares is coming from interest in the strategy. After years of very heavy investment, M&S is beginning to explain in detail how the benefits might come through," said Anne Critchlow, non-food retail analyst at Societe Generale, who raised their rating on the stock to "Buy".
Security firm G4S also posted solid results, gaining 3.5 percent after reporting a pick-up in underlying revenue in the third quarter.
Life insurer Resolution topped the FTSE 100 leaderboard, rising 7 percent, with traders citing an upgrade to the stock by BofA Merrill Lynch to "buy" from "hold".
"We now have greater confidence in the company's ability to meet our dividend forecasts. And this is the most obvious reason to own the shares in our view," Bank of America Merrill Lynch analysts said in a research note. Resolution traded twice its average 90 day volume in the session.
(Editing by Simon Jessop and Keiron Henderson)