Reuters: Hot Stocks: Britain's FTSE extends gains as miners lead technical bounce

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Britain's FTSE extends gains as miners lead technical bounce Jun 14th 2013, 07:53 Fri Jun 14, 2013 3:53am EDT * FTSE up 0.3 percent at 6,320.41 * Blue chips face 6,350 hurdle * Miners bounce as Citi lifts short-term view * Citi remains bullish on UK equities long term By David Brett LONDON, June 14 (Reuters) - Britain's blue chip shares rose early on Friday as miners led a technical rise after upbeat U.S. economic data helped cool fears that the economy would struggle if the central bank withdrew stimulus. Miners rose 1.7 percent, and the FTSE was up 15.78 points, or 0.3 percent, at 6,320.41 by 0721 GMT, after stabilising on Thursday following sharp losses. The index has fallen nearly 8 percent since mid-May on worries the Federal Reserve might scale back its stimulus programme before the economic recovery is sustainable. "The FTSE bounced off the 6,200 level (on Thursday), which was expected and was not far off the 200-day support line. Good economic data and performance in the U.S. lifted the gloom," Jawaid Afsar, sales trader at SecurEquity, said. Thursday's data showing upbeat U.S. retail sales and a drop in jobless claims triggered short covering and prompted some investors to start picking up battered stocks but Afsar warned more volatility and further falls could not be ruled out ahead of a Federal Reserve policy meeting next week. The FTSE 100, however, rose early on Friday having rebounded from 6,200 and a test of April lows on Thursday, but the three-month trendline of old support-turned-resistance around 6,350 is a hurdle that must be overcome. Miners extended their rebound into a second day but the sector is still down more than 19 percent in 2013 due to earnings worries. "Given the sharp fall in share prices and our view is that valuations are becoming more supportive, we are increasing our short-term stance (six-month view) from bearish to (just) neutral," Heath Jansen, strategist at Citigroup said. But he added that Citi maintains its structural negative view on the sector and sees few, if any, potential catalysts for it to turn bullish. In a broader note on European and UK stocks, Citi analysts backed a further equity re-rating as investors raise risk appetite. "Given the sharp fall in corporate bond yields over the last 12-18 months, it appears that many investors are being 'forced' to take on risk and we believe that equity markets will benefit," Citi analyst Jonathan Stubbs wrote. "This supports our further re-rating thesis and expected 20 percent-plus equity returns to end-2014," he wrote. (Editing by Susan Fenton) Link this Share this Digg this Email Reprints

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