Reuters: Hot Stocks: Britain's FTSE recovers after worst day in 1-1/2 yrs

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Britain's FTSE recovers after worst day in 1-1/2 yrs Jun 21st 2013, 07:49 Fri Jun 21, 2013 3:49am EDT * FTSE 100 up 0.6 pct * Rebound follows worst daily fall since Sept 2011 * SocGen forecasts rebound in miners By Toni Vorobyova LONDON, June 21 (Reuters) - Britain's FTSE 100 index edged higher on Friday, with some investors seeing buying opportunities after the market's biggest one-day drop in 1-1/2 years, and with technical charts offering some support. The British benchmark dropped 3 percent on Thursday, its worst daily showing since September 2011, spooked by news that the U.S. Federal Reserve was planning to scale back its equity-friendly stimulus programme in coming months. But the FTSE 100 managed to close just off the lows and above its 200-day moving average, offering some technical support and tempting in buyers. "We've had a bit of a correction, and even now I think the correction looks overdone, so I am still fairly bullish," said Neil Marsh, strategist at Newedge. "It was an inevitability that the Fed were eventually going to start tapering, and ultimately they are only going to do that when the economy is improving ... and if the economy is improving that has to be a good thing (for equities)." The FTSE 100 was up 38.74 points or 0.6 percent by 0723 GMT at 6,198.25 points, rebounding from five-month lows hit in the previous session. The expiry of monthly and quarterly options and futures was expected to exacerbate market volatility. Miners such as Rio Tinto, up 1.9 percent, were among the top gainers, as investors bought in to what has been the worst performing sector this year. Societe Generale cited valuation as one of the reasons behind its forecast for a near-term rally in miners, citing Rio as its top pick in the sector. Materials currently trade on just 9.4 times their expected earnings for next year, making it the second cheapest sector after energy and compared to a FTSE 350 average of 10.9 times, according to Thomson Reuters StarMine. UK and other European stocks look cheap relative to U.S and Japanese peers, and offer higher dividend yields, said J.P. Morgan Asset Management global market strategist David Lebovitz, adding that corporate and economic fundamentals are improving. "I would focus on companies with global revenue streams... Additionally, for income-oriented investors, European dividend-paying equities make sense, particularly given that dividend yields in Europe tend to be higher than in other developed markets," Lebovitz said. (Editing by Catherine Evans) Link this Share this Digg this Email Reprints

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