Reuters: Hot Stocks: Banks lead UK stocks back up towards 9 month highs

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Banks lead UK stocks back up towards 9 month highs Dec 19th 2012, 09:16 Wed Dec 19, 2012 4:16am EST * FTSE 100 index gains 0.3 percent * Banks head higher, helped by UBS fine relief * Bunzl drops as trading update fails to inspire By Jon Hopkins LONDON, Dec 19 (Reuters) - Gains by banks propelled Britain's top share index toward nine month highs on Wednesday, helped by growing expectations of a budget deal in the United States. Global stock markets hit 17-month highs on Wednesday on signs of compromise in the talks to stop the "fiscal cliff" of automatic tax hikes and spending cuts in the U.S. that could hurt the world's biggest economy next year. UK banks provided around 6 points, or a third of the FTSE 100 index's total gains, with the sector in the spotlight after Swiss peer UBS agreed to a $1.5 billion bill and admitted to fraud on Wednesday in order to settle charges of manipulating global benchmark interest rates. The fine, the second largest to be received by a bank, was in line with expectations and UBS shares added 0.3 percent in Zurich. "The UBS fine, while large, is as expected, so that's provided some relief in the sector," said Richard Hunter, head of equities at Hargreaves Lansdown. "It is also increasingly likely that Barclays may have benefited the most from putting its hands up first in the Libor scandal, as it got a smaller fine." Barclays gained 1.1 percent, while part-nationalised lenders Lloyds Banking Group and Royal Bank of Scotland topped the blue chip leader board, up 2.2 percent and 1.7 percent respectively. Traders said financial stocks also got a boost from a sector upgrade to "overweight" by Credit Suisse in its Global Equity Strategy 2013 outlook. The broker upped insurers to "overweight" saying it continued to prefer life companies to banks, helping Old Mutual and Aviva both gain 1.5 percent. At 0907 GMT, the FTSE 100 index was up 20.40 points, or 0.3 percent, at 5,956.30, having posted gains of 0.4 percent on Tuesday, surpassing last week's nine-month peak of 5,948.50 and within 20 points of its 2012 high. "There is now potential for a retest of the recent and 9-month highs around 5,970 which, if broken on any suggestion of a (fiscal cliff) deal ... before the 1 Jan deadline, could see an assault on 18-month highs of 6,000, then 2011 highs around 6,100," said Mike van Dulken, Head of Research at Accendo Markets. BUNZL BLIGHTED Packaging firm Bunzl was the top FTSE 100 faller, down 4.5 percent as investors failed to be excited by the firm's in-line trading update, and as it unveiled two acquisitions in Canada and Australia. "We are not changing our figures for 2012 but we have slightly reduced our PBT (profit before tax) numbers for 2013 ... from 343 million pounds to 328 million pounds," Numis Securities said in a note. "Although we believe the shares are attractive to low beta long term portfolio managers in the short term the shares are up with events on almost 15 times 2013 earnings," Numis added. Ex-dividend factors trimmed 0.45 points off the FTSE 100 index on Wednesday, with Burberry and United Utilities both trading without entitlement to their latest payouts, leading market makers to adjust their prices. (Reporting by Jon Hopkins; editing by Patrick Graham) Link this Share this Digg this Email Reprints

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