Reuters: Hot Stocks: Britain's FTSE hits 5-month high, then stalls on profit-taking

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Britain's FTSE hits 5-month high, then stalls on profit-taking Oct 28th 2013, 12:08 Share this Email Print Reprints Mon Oct 28, 2013 8:08am EDT * FTSE 100 down 0.1 pct after hitting 5-month highs * IHG falls on results, Aggreko gains * Index just above 6,700, next resistance seen around 6,750 By Toni Vorobyova LONDON, Oct 28 (Reuters) - Britain's top share index edged down on Monday after hitting a five-month high, with a rally stalling just above the key 6,700 points level as a mixed crop of earnings led to profit-taking. InterContinental Hotels led the fallers, down 2.4 percent after third quarter revenue in the Americas just missed expectations and sales growth slowed in September. Faced with a lacklustre earnings season, analysts have started to push back their expectations for a recovery in corporate profits, seen as key to continued equity market gains after a rally fuelled by central bank liquidity. Over the past month, earnings momentum on the FTSE 100 - analyst upgrades minus downgrades - has fallen to -2.8, its lowest since August 2012, according to Datastream. But with Wall Street hitting repeatedly hitting record highs and growing expectations that central bank stimulus will continue for some time to come, many expect equities to remain well supported even if the upward momentum fades. "There is bound to be a bit of profit taking  (but) I think we can be fairly bullish on the market while we stay above 6,700 (on the FTSE)," said Jonathan Roy, sales trader at London Stone Securities. The FTSE 100 was down 5.26 points or 0.1 percent at 6,716.08 points by 1146 GMT, showing some signs of running out of steam after rising in 11 of the past 12 sessions and scaling a 5-month intra-day high of 6,739.66 points. "It's been extremely strong for weeks," said Clive Lambert, technical analyst at FutureTechs. "It's too early to bet against the recent rise ... but if you look at historical charts we are getting close to massive resistance. The FTSE has got a lot of challenges immediately above it which is something to be wary of," he added, noting the 6,750 area which served as a peak in 2007 prior to a sharp downward correction. Aggreko led Monday's gainers, up 4.6 percent after the temporary energy provider said it expected underlying revenues and margins to be ahead of the prior year both in the second half and on a full-year basis. Traders said that although the figures were in line with expectations, it was being squeezed higher as people took off "short" bets on future falls in the share price. To short, traders borrow a stock they do not own and sell it, hoping to be able to buy back it more cheaply at a later date when they need to repay the loan. For Aggreko, 25 percent of the shares available to lend were out on loan as of Oct. 25, according to Markit data, the fifth highest utilisation rate in the FTSE and leaving room for a spike as investors bought back the shares to cover positions. (Reporting By Toni Vorobyova; Editing by John Stonestreet) Link this Share this Digg this Email Reprints

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