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FTSE trades above 6,300 for first time since May 2008
January 28, 2013 / 8:11 AM / 5 years ago

FTSE trades above 6,300 for first time since May 2008

LONDON (Reuters) - The FTSE 100 breached the 6,300 level for the first time since May 2008 on Monday, driven by strength in banking and energy stocks, although that heady height failed to hold for the close.

The London Stock Exchange is seen during ther morning rush hour in the City of London April 11, 2011. REUTERS/Toby Melville

Global giant HSBC added the most points to the FTSE 100 index, with its 1.0 percent advance alone accounting for almost 5 index points and helping the UK banking sector to a 0.8 percent gain, with the lender highlighted as Goldman Sachs preferred UK banks pick in a sector review.

Goldman reiterated its “conviction buy” rating on HSBC on the basis of relative valuation, return trends and expectations.

The bank also repeated its “buy” rating on Barclays, the top percentage blue chip gainer, up 1.7 percent.

But Goldman downgraded its rating for Royal Bank of Scotland to “sell” as it believes the majority-state-owned lender is the most exposed to near-term regulatory risk.

RBS shares still gained 0.5 percent with the banking sector overall buoyed by Friday’s news that banks will repay early 137 billion euros of crisis loans taken a year ago from the European Central Bank, and which ECB President Mario Draghi has said “avoided a major, major credit crunch”.

The bigger-than-expected repayment was seen as a sign that at least parts of the financial system are returning to health.

Other financial stocks also took heart from the move, with Aberdeen Asset Management rallying 1.6 percent, and insurer Standard Life up 1.2 percent.

The FTSE 100 index closed up 9.96 points, or 0.2 percent at 6,294.41, having reached a fresh 4-3/4 year peak of 6,311.26.

“The benchmark has now seen off four major figure levels in under a month and is now 6.7 percent higher than where it started the year which has caught even some of the more bullish investors by surprise,” Angus Campbell, Head of Market Analysis, Capital Spreads said.

“Since we’ve seen such considerable strength in equity markets so far this year there’s bound to be some resistance near the highs, but with the 6,300 level now behind us for those bullish investors the only way is up,” Campbell added.

A worker shelters from the rain as he passes the London Stock Exchange in the City of London at lunchtime October 1, 2008. REUTERS/Toby Melville

Market heavyweight Vodafone was also a big contributor to the FTSE 100 advance again, up 0.5 percent and adding more than 1.6 points to the index as the telecoms firm extended its advance into a third consecutive session.

Traders have cited talk that the mobile telecoms group may sell its stake in its U.S. wireless joint venture to partner Verizon as the main reason behind the rally.


Energy stocks also added their considerable strength to the blue chips, providing over 3 points of the index’s advance, ahead of the sector’s upcoming earnings season.

A trader monitors the screen on a trading floor in London January 22, 2010. REUTERS/Stefan Wermuth

Royal Dutch Shell gained 0.8 percent, with Credit Suisse reiterating its “outperform” stance on the oil firm ahead of its fourth-quarter results and 2013 strategy update due on Thursday.

BP, which unveils its fourth-quarter numbers next Tuesday, gained 0.7 percent.

But BG Group, which also posts its fourth-quarter numbers next Tuesday missed out on the gains as investors booked profits after recent gains on renewed bid speculation.

Technical indicators suggesting a pause in BG’s advance also led some investors to cash in on recent gains, traders add.

BG’s fall knocked the most individual points off the FTSE 100, with its 2.0 percent decline accounting for 3 index points.

Declines by mining stocks was the biggest sectoral drag on the blue chips, but they still only accounted for around 1.4 index points.

Outsourcing group Capita was also a blue chip faller, down 0.9 percent, with traders citing the impact of a Canaccord Genuity rating downgrade to “sell” from “hold”.

The broker said it expected Britain’s coalition government may look elsewhere than Capita when handing out its next batch of contracts, which could impact the company.

Reporting by Jon Hopkins; editing by Ron Askew

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