London Report: FTSE near to a record high on global pick-up

BRITAIN’S top share index extended its gains and closed near a record high yesterday, led by mining companies, amid signs a global economic recovery was picking up speed.

The UK mining index rose 0.4 per cent, making it the biggest sectoral gainer in the FTSE 100 index. The gains came after China, the world’s biggest metals consumer, posted a rise in exports and the US reported encouraging jobs data on Friday.

“The global economic recovery is grinding higher, and weekend macroeconomic data from China further supports this view,” said Robert Parkes, an equity strategist at HSBC.

“The improving business cycle is positive for cyclical sectors and obviously helps the mining sector, which is particularly sensitive to developments in China.”

The FTSE 100 index ended 0.2 per cent higher at 6,875.00 points, leaving it about one per cent shy of the record set in late 1999. It has risen in the previous two weeks and is up nearly two per cent so far this year.

The index has been coming up against resistance around 6,880, but Charles Stanley technical analyst Bill McNamara said it no longer looks overbought, which “implies that it might be able to push higher in the near term”.

Charts showed the 14-day relative strength index for the UK benchmark was at about 59 after rising last month to around 70, a technically “overbought” market condition that often results in a pullback.

Lloyds Banking Group dropped 1.7 per cent. The bank said it would list a quarter of its shares in TSB on the London stock market at a price of 220-290p per share, which is below the business’s book value.

The price reflects a cooling of investor interest in UK company flotations in recent weeks after a rush of activity earlier in 2014.

Clothing chain Fat Face pulled its planned London listing last week, and shares in insurance-to-holidays firm Saga have fallen below their IPO price.

“I am feeling these IPOs are starting to grow weary on investors. The recent Saga failure is no exception and to price in at the bottom of the range presents a double-edged sword,” said Galvan’s head of trading, Ed Woolfitt.

“Bearing in mind Lloyds need to make the disposal as they are obliged, it may be just a case of them making sure it is fully subscribed.”