FTSE holds gains as Italy nears crisis

BRITAIN’S top share index rose yesterday, as earnings from UK corporates such as Lloyds Banking Group and Vodafone were received positively by investors, although Eurozone worries meant gains were vulnerable to profit taking.

Miners and integrated oils, rising with commodity prices, also helped the UK’s benchmark index close up 56.52 points, or one per cent at 5,567.34 but well off the intraday high of 5,616.00.

Traders urged caution, warning volumes suggested there was little sustenance to the current rally. “Until the fund managers are convinced a solution has been found to the debt crisis they’re going to be reluctant to come in from the sidelines, which leaves the market susceptible to a sell-off, which is what we saw late on,” Jimmy Yates, head of equities at CMC Markets, said.

Lothar Mentel, chief investment officer at Octopus Investments which manages $4bn, said: “Our positioning remains cautiously defensive, very much mindful that investor sentiment and newsflow from the Eurozone is likely to continue to cause market gyrations.”

That sentiment was reflected in some of the gains seen by UK blue chips.

Food and retail group Associated British Foods (ABF) gained 1.4 per cent after reporting a beat in full-year earnings, with analysts keen on the Primark owner’s defensive qualities.

“We view ABF as an attractive investment proposition, particularly so with ongoing economic and political uncertainty leading to volatility in equity market,” Shore Capital said repeating its “buy” rating on the stock.

Luxury goods group Burberry, liked by investors for its exposure to Asia which is seen as a growth-driver in 2012, rose 3.6 per cent.