A late afternoon rally nudged Britain’s top share index into positive territory yesterday, as investors eyed geopolitical turmoil in the Arab world and favoured defensive stocks.
The FTSE 100 closed 0.98 points firmer at 5,974.76, having flirted with the key psychological 6,000 level earlier in the session after Kuwait’s oil minister said OPEC was considering boosting production.
While this helped pare crude prices, traders said investors were focused on longer-term implications as Libya threatens to dissolve into civil war, and as tensions persist elsewhere in the region.
After yesterday’s short rally, analysts warned that a break above February’s highs was crucial for the index to maintain its upward momentum.
“I think we could well have seen the highs at 6,100. If the FTSE doesn’t break above those highs in the next month or so, I think we could see a correction lower down to round about 5,600,” Michael Hewson, market analyst at CMC Markets, said.
“Among the favoured equity plays was a move from more cyclical stocks into defensives, said Manoj Ladwa, senior trader at ETX Capital.
“I know Morgan Stanley came out with a note earlier on recommending that clients move that way as well, so that’s certainly a theme that we’re seeing today.”
Defensive telecommunication firms Vodafone and BT Group were among the top blue chip performers, up 1.8 per cent and 4 per cent respectively in high volumes. Traders cited Morgan Stanley upgrades on the pair.
Randgold Resources was the sharpest blue-chip faller, dropping 8.2 per cent, with traders saying trouble in Ivory Coast, where it has operations, was hurting it.