Reuters: Hot Stocks: Britain's FTSE struggles despite Fed hopes

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Britain's FTSE struggles despite Fed hopes Dec 12th 2012, 09:17 Wed Dec 12, 2012 4:17am EST * FTSE 100 down 0.1 percent, stuck below 5,932 resistance * Miners higher; Anglo American boosted by broker upgrade * Tullow Oil extends falls as brokers cut targets * Ex-dividends clip 1.7 points off blue chip index By Jon Hopkins LONDON, Dec 12 (Reuters) - Britain's top share index was largely flat on Wednesday after failing for another session to get past a key technical level which has all but halted a month-long rally this week. UK blue chips took support from expectations the U.S. Federal Reserve would deliver another round of stimulus for the world's largest economy later in the session as well as hints of some progress on U.S. budget talks. Miners led the blue chip gainers, supported by a firmer copper price on the hopes of further stimulus in the U.S., and on recent signs of a revival of economic growth in China, the top consumer of metals. But Britain's own economic prospects remain grim and after hitting a nine-month closing high in the previous session, the index was facing strong resistance around 5,932. Dealers said that even if it got past that, the path higher looked sticky. "There is the potential for plenty of resistance between 5,900 and 6,000 and the index might well need several attempts to achieve the break higher. The next key level is the March closing peak, at 5,965," Bill McNamara, technical analyst at stockbrokers Charles Stanley, said. At 0847 GMT, the FTSE 100 index was down just 2.93 points, or less than 0.1 percent at 5,922.04 having closed 0.1 percent higher on Tuesday, with an early pop above 5,932 - a September intraday high - swiftly reversed. The U.S. central bank is expected to extend its purchases of mortgage-backed debt and replace another expiring stimulus program with a new bout of money creation following the Fed's latest FOMC meeting on Wednesday. And negotiations to avert about $600 billion in spending cuts and tax rises ahead of a year-end deadline, known as the "fiscal cliff", intensified as President Barack Obama and U.S. House of Representatives Speaker John Boehner spoke by phone on Tuesday after exchanging new proposals. "We are still at the mercy of the fiscal cliff talks, but if the Fed can deliver some early seasonal cheer later we could resume our grind higher in London," Mike Mason, a senior trader at Sucden Financial Private Clients said. Miner Anglo American topped the FTSE 100 gainers, ahead by 1.4 percent as it was lifted by a Barclays upgrade in rating, with the broker highlighting a 30 percent underperformance by the miner's stock versus peers BHP Billiton and Rio Tinto. "Given the numerous levers that can be pulled, and the fact the big diversified miners don't tend to underperform by more than 30 percent in any given period, we feel the risk/reward is turning less negative," Barclays said in a note. "However, with the shares trading on a PER (price earninsg relative) of 16.8 times 2013 earnings using spot prices we don't see the valuation case for Anglo as particularly compelling and cautiously upgrade to Equal Weight from Underweight." Ex-dividend factors clipped 1.70 points off the FTSE 100 index on Wednesday following adjustments by market makers, with Babcock International, Polymetal, and Wolseley all trading without entitlement to their latest dividend payout. Tullow Oil was the biggest blue chip faller, down 2.2 percent, extending the previous session's 8 percent drop which followed news of a dry well off the coast of Ghana, its main target area, with a raft of brokers' cutting target prices for the explorer. (Reporting by Jon Hopkins; editing by Patrick Graham) Link this Share this Digg this Email Reprints

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