Reuters: Hot Stocks: FTSE hovers as prospect of U.S. budget tussle adds to uncertainty

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FTSE hovers as prospect of U.S. budget tussle adds to uncertainty Sep 24th 2013, 11:31 Tue Sep 24, 2013 7:31am EDT * FTSE 100 up 0.1 pct to 6,564.05 pts * U.S. budget talks, stimulus uncertainty curb appetite * Saxo expects rally to resume next week By Francesco Canepa LONDON, Sept 24 (Reuters) - Britain's top share index moved sideways on Tuesday as the prospect of another tussle over the U.S. budget ceiling added to uncertainty over when the Federal Reserve will trim its stimulus. By 1050 GMT, the FTSE 100 was up 6.7 points, or 0.1 percent, to 6,564.05 points, having found support around 6,540 points after a 1 percent drop over the previous two sessions. Political discord over the U.S. budget raised the prospect of a federal government shutdown if a deal is not struck by month-end, stopping many investors from buying British blue chips as they traded just 3 percent off 13-year highs back in May. "In the short term, it (the market) has got the U.S. budget negotiations and the debt ceiling negotiations to cope with, so that's restraining animal spirits a little bit... this week," Nick Beecroft, chairman of Saxo Capital Markets, said. "But I think that will ultimately get sorted out next week in such a way that markets can flourish." The FTSE has given back all the gains made after the Federal Reserve's decision last week not to scale back its equity-friendly bond buying programme as mixed comments from policy makers raised uncertainty about the Fed's future moves. Fed speakers on Monday added to the confusion by saying there probably was not enough data to taper at the next meeting, contradicting what St. Louis' Fed president James Bullard said on Friday. "Markets are treading water at the moment with investors remaining cautious over whether the Fed will scale back its stimulus measures," Mark Ward, head of trading at Sanlam Securities. "We feel tapering in October is likely, with the Fed not wanting to miss the rare opportunity of being able to reduce stimulus measures while not causing instability and hefty volatility in the markets," he said. With the macro outlook murky, technical analysts said the FTSE 100 was likely to remain in a tight range with key resistance at 6,606 and support of 6,479. Oliver Pfeil, portfolio manager, global equities, at Deutsche Asset & Wealth Management, which has about 1 trillion euros ($1.35 trillion) in assets under management, said a pick up in corporate earnings could be the driver of the next leg of the equity market rally. Insurer and Autos are the only sectors with positive earnings momentum, according to Thomson Reuters Datastream, with basic resources mired deep in downgrade territory and all other sector still in gradual decline. In a quiet early session, oil and gas-focused engineer Amec fell 1 percent after UBS cut its rating to "neutral" from "buy". (Additional reporting by David Brett) Link this Share this Digg this Email Reprints

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