Reuters: Hot Stocks: Britain's FTSE gains on Cyprus deal, cyclical stocks up

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Britain's FTSE gains on Cyprus deal, cyclical stocks up Mar 25th 2013, 09:29 Mon Mar 25, 2013 5:29am EDT * FTSE 100 index rises 0.6 percent * Banks, energy stocks among top risers * Aberdeen jumps 6.6 percent on strong inflow By Atul Prakash LONDON, March 25 (Reuters) - Britain's top share index rose in early trading on Monday, with banking stocks in demand as investors welcomed a 10 billion euro bailout deal for Cyprus that staved off the collapse of its lenders. At 0855 GMT, the FTSE 100 index was 40.12 points higher, or 0.6 percent, at 6,433.88. It fell 1.5 percent last week in its biggest weekly drop since November. The index had fallen in five of the previous six sessions and touched a two-week low on concerns that Cyprus might be forced out of the euro zone, taking the region's debt crisis into uncharted waters. In a deal agreed overnight with international lenders, the island will shut down its second largest bank, Popular Bank of Cyprus, and inflict heavy losses on uninsured depositors. "It's certainly something that investors can now put to bed as it's been a drag on the indices for the past week," Angus Campbell, head of market analysis at Capital Spreads, said. "With a shortened week though, both this one and next we might not see a sudden rush back into equities until things normalise completely after Easter." Bank shares were in demand in London, with Barclays , Lloyds Banking Group and Royal Bank of Scotland rising 1.4 to 2.0 percent. Energy shares were supported by a rise in crude oil prices. Royal Dutch Shell, Tullow Oil and BG Group up 0.3 to 1.4 percent. CAUTIOUS APPROACH Cyclical sectors - which tend to track economic developments - regained ground, but some analysts said equity investors should tread cautiously. "Clearly risk assets are going to stage a partial rebound, although we're not quite sure that this is the end of it given that the terms for depositors of more than 100,000 euros in Cyprus are significantly worse than before," Jeremy Batstone-Carr, head of private client research at Charles Stanley, said. "More generally, we see the recent release of European PMI data as reflecting continued lack of enthusiasm for cyclicals. Europe is still in recession even if Cyprus does end up being resolved and with earnings expectations still falling, we're sticking with our quality defensives strategy." According to the bailout deal, deposits above 100,000 euros in Popular Bank of Cyprus and Bank of Cyprus will be frozen and used to resolve Popular Bank of Cyprus's debts and recapitalise Bank of Cyprus. A recent rally in stocks, before the sell-off on Cyprus concerns, prompted clients of Aberdeen Asset Management to pull in 3.5 billion pounds ($5.3 billion) of net new money in the first two months of the year. Aberdeen surged 6.6 percent to top the gainers list on the FTSE 100 index. Fund manager Schroders, the second-biggest gainer on the index, was up 2.9 percent. The company said it would pay 424 million pounds ($646 million) to buy Cazenove Capital in an agreed deal. Vodafone rose 2.5 percent on renewed speculation the telecoms firm could be working towards either selling its 45 percent stake in Verizon Wireless in the United States, or merging with the Wireless unit's co-parent Verizon. (Editing by John Stonestreet) Link this Share this Digg this Email Reprints

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