UK’s FTSE pauses near recent resistance levels
LONDON, Nov 30 — Britain’s top shares eased today after the previous session’s bumper gains dragged the blue chip index close to recent highs which have proved a major resistance level.
By 0856 GMT, the FTSE 100 was down 0.06 of a point at 5,870.24, having scaled three-week peaks yesterday. The index faces tough resistance around the 5,920-5,930 area, which it has tried and failed to break three times in as many months.
“The FTSE is in a position to challenge recent tops at 5,921.80 and 5,928.30,” Autochartist analyst James Hyerczyk said in a note. “A sustained move through these prices should trigger an acceleration to the upside with key level resistance likely to be tested at 5,972.80.”
Yesterday’s gains were triggered by optimism about a US budget deal to avert a recession in the world’s biggest economy, although House of Representatives Speaker John Boehner poured cold water on those hopes after the European market close.
“A decisive plan is unlikely by the end of the year but we are not being swayed by the various toing and froing,” Guy Foster, head of strategy at Brewin Dolphin, said.
“Nobody wants to seen as not being conciliatory but the reality behind the closed doors is that both parties have their own positions to push,” he said, adding he has been tinkering with the portfolio but remains modestly positive.
The FTSE 100 has rallied 5 per cent in the last nine days on growing expectations that a deal might be struck.
But today, the last trading day of the month, saw a modest bout of profit-taking, with UK banks — the top index performer in recent months — edging lower.
UBS said while tail risk is reducing around the UK banking sector with capital positions robust, the stocks’ recent performance leaves upside modest.
Barclays and Lloyds each fell 0.5 per cent, having gained up to 40 per cent in the last three-months.
Royal Bank of Scotland shed 1.6 per cent as the Daily Telegraph reported the UK lender could be forced to explore the sale of core businesses after the Bank of England increased the pressure on lenders to raise new capital.
Separately, the bank announced the sale of its Indian Retail & Commercial banking operations would not be proceeding.
A UBS downgrade weighed on Kingfisher, which shed 1.5 per cent as the investment bank cut its rating on the retailer to “neutral” from “buy” after the firm reported a fall in profit yesterday.
While on the upside, Intertek gained 1.6 per cent after Berenberg Bank raised its recommendation on the British testing company to “buy” from “hold”. — Reuters