Reuters: Hot Stocks: Britain's FTSE edges higher as Italy doubts dampen volumes

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Britain's FTSE edges higher as Italy doubts dampen volumes Feb 27th 2013, 11:44 Wed Feb 27, 2013 6:44am EST * FTSE 100 up 0.2 percent after Tuesday's rout * Banks gain on Fed stimulus prospects * Low volumes underscore continued caution By Toni Vorobyova LONDON, Feb 27 (Reuters) - Britain's top share index edged higher on Wednesday, with some investors using the previous day's steep fall to enter the market at cheaper levels, reassured by prospects of continued U.S. central bank stimulus. Federal Reserve Chairman Ben Bernanke said late on Tuesday that the benefits of the stimulus policies were clear, easing financial market concerns about the possibility of an early end to the measures which have helped support risk appetite globally. Banks, which of all UK sectors benefit the most from the liquidity that the Fed's quantitative easing programme provides, gained 0.5 percent, adding the most points to the FTSE 100. By 1117 GMT, the benchmark UK index was up 10.69 points, or 0.2 percent, at 6,281.13, recovering some of Tuesday's 1.3 percent drop suffered after Italian elections ended in stalemate. However, volumes were relatively light, with under 30 percent of the 90-day daily average traded in the first three hours, as investors remained concerned about the political uncertainty in Italy and the possible repercussions for the rest of the euro zone. "It's slightly firmer this morning. The main catalyst for me was the reiteration from Bernanke that asset purchases will continue, equity markets have certainly taken that as positive," said Jordan Hiscott, trader at Gekko Capital Markets "We had some tentative buy orders in the FTSE this morning ... Buying on dips is still prevalent but the size of it has dramatically changed - probably half to 25 percent of what they were usually trading. This Italian election has certainly put some uncertainty in the market." The centre-left bloc secured a majority in the lower house but is unable to govern without a deal with either former prime minister Silvio Berlusconi, the man it blames for ruining Italy, or the anti-establishment 5-Star Movement. An Italian debt auction on Wednesday saw the government sell the maximum planned 6.5 billion euros of debt, but yields jumped to multi-month highs as investors demanded higher premiums in the election aftermath. Wary of the broader macro uncertainty, investors looked for as much clarity as possible on the micro level, punishing any signs of vagueness from corporates. Petrofac was the top faller among UK blue chips, down 4.6 percent after the British oil services firm forecast "good growth" but, in contrast to previous years, failed to set a specific target. In contrast, pump-maker Weir added 2.2 percent after pledging "single digit revenue growth" this year, posting forecast-beating results for 2012 and raising dividends. "We expect to see small upgrades to consensus forecasts this morning," brokers at Killik said in a note. "Given the current valuation - 13 times consensus 2014 earnings - we remain positive on the shares ... In the current environment, the group has been helped by its strong suite of products and its geographic and commodity-based diversity. Finally, we believe the company remains an attractive target in a consolidating sector, given its strong position in a number of growth markets." (Reporting By Toni Vorobyova; Editing by Toby Chopra) Link this Share this Digg this Email Reprints

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