Reuters: Hot Stocks: Britain's FTSE edges up, led by Johnson Matthey

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Britain's FTSE edges up, led by Johnson Matthey Jun 6th 2013, 08:17 Thu Jun 6, 2013 4:17am EDT * FTSE 100 climbs 0.1 percent * Johnson Matthey top riser after results * Barclays falls, Sumitomo cuts stake in the bank By Tricia Wright LONDON, June 6 (Reuters) - Britain's blue chip shares edged higher on Thursday, steadying after steep losses in the previous session and led by specialty chemicals group Johnson Matthey which reported a smaller-than-expected drop in profit. The FTSE 100 was up 6.54 points, or 0.1 percent, at 6,425.85 by 0759 GMT, having slid 2.1 percent on Wednesday, pushing it below its 50-day moving average on concerns the U.S. central bank might soon scale back its bond purchase programme. Although the index is now looking fragile from a technical standpoint, some analysts said bouts of volatility could offer attractive entry points for investors plumping for equities over bonds due to better returns. "The big long-term question is how we exit from QE (quantitative easing) and unconventional stimulus but I think the asset allocation argument (still holds). The first port of call is still equities because you've got that yield advantage," said Ian Williams, equity strategist at Peel Hunt. Johnson Matthey jumped 7.1 percent after its underlying pre-tax profit came in at the top end of analyst expectations, with traders anticipating yet further share price gains from the stock which is trading at all-time highs. "Much of the short-term negativity has been removed from the share price given today's news and we think that FV (fair value) remains at least 5 percent higher than current levels given the uplift we expect in the raw material space," Atif Latif, director of trading at Guardian Stockbrokers, said. Barclays topped the losers' list with a 2 percent drop after Japan's Sumitomo Mitsui Banking Corp. sold half its stake in the British bank, worth about 260 million pounds ($400.17 million), according to people familiar with the matter. Mounting uncertainty over the Fed's intentions regarding its economic stimulus measures has put investors on edge recently, with the FTSE 100 dropping more than 6 percent over the past two weeks. Trade was likely to be volatile ahead of U.S. jobs data on Friday which, if strong, could add to speculation as to when the Fed might scale back its QE programme, which would be detrimental to the equity market. "It's one of those difficult ones to predict - if it's a good number, is that bad? And if it's a bad number, is that good?" Mark Priest, trader at ETX Capital, said. "The markets are pretty nervous at the moment anyway, I think it's going to be pretty choppy trade ... people are sitting back and waiting." ($1 = 0.6497 British pounds) (Editing by Susan Fenton) Link this Share this Digg this Email Reprints

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