Reuters: Hot Stocks: Britain's FTSE 100 faces resistance after earnings lift

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Britain's FTSE 100 faces resistance after earnings lift Jul 31st 2013, 11:27 Wed Jul 31, 2013 7:27am EDT * FTSE 100 up 41.57 points at 6,612.52 * Diageo, Tullow, Centrica rise after results * HSBC benefiting from trade out of local banks * BP, GKN benefit from bullish post results comment By David Brett LONDON, July 31 (Reuters) - Solid earnings kept the FTSE 100 buoyant by midday on Wednesday as updates from Diageo and Tullow impressed, but gains could be tempered with the index approaching short-term resistance. Diageo rose 3 percent after meeting expectations with an 8 percent rise in annual operating profit, while organic sales climbed 5 percent, beating expectations. Oil explorer Tullow gained 1.7 percent after announcing a successful drill at its Etuko-1 well in Kenya. Centrica rose 1.6 percent after reporting higher first half earnings in an update analysts at Liberum Securities said was solid. Although only a small sample size, 75 percent of UK-listed companies have either beaten or met expectations in the current quarter, compared with just 52 percent of European companies. The FTSE 100 index of leading shares was up 41.57 points, or 0.6 percent, at 6,612.52 points by 1109 GMT, attempting to creep out of its recent tight 90-point range stretching back to July 12. Steve Ruffley, chief market strategist at Intertrader, sees resistance for the index at 6,606 and the FTSE 100 in a battle to break out of a technical triangle formed over the last few days. "If the upper break is rejected then the FTSE should drop towards 6,533.9. This is a key decision point from the end of the up move (June 24 to July 11) where the market moved higher after rejecting going back into the range," he said. "If we close below that then we see longs profit taking and the FTSE getting back to fair value at 6,479, 6,395.5 and maybe as low as 6,300.4 - the 38.2 Fibonacci retracement level." Heavyweight stocks helped push the FTSE higher. Europe's biggest bank HSBC contributed nearly 20 percent of the gains, adding 8 points by midday with traders citing a switch out of more UK-focused banks following Barclays' on Tuesday. Energy BP found firmer footing, adding 1.3 points to the FTSE 100, boosted by upbeat comment from BofA Merrill Lynch and JP Morgan post results. JP Morgan also upgraded British car and plane parts maker GKN to "overweight" after its results on Tuesday. Trade, however, was likely to remain choppy and the Fed's post-policy meeting announcement late on Wednesday could derail the rally. "I am now selling on the bounces," Ed Woolfitt, head of trading at Galvan, said. "Technically, it feels a correction is brewing up." (Reporting by David Brett; editing by Ron Askew) Link this Share this Digg this Email Reprints

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