FTSE pauses for breath beneath the 6,300 mark

BRITAIN’S FTSE 100 was lifted yesterday by strength in energy stocks and food retailers, but the index was still struggling to break through the four-and-a-half year highs hit at the start of February.

London’s blue chip index gained 13.13 points, or 0.2 per cent at 6,277.06, holding within the 70-point range of the last five days and below the psychologically important 6,300 level.

“We have had such a strong run it is healthy to pause for breath and I am still in the camp that this is just a pause before we move on a bit further,” James Burns, fund manager at Smith & Williamson, said.

“If you look at the last ten days or so the market tries to drop off a bit and within a day it has rebounded, so it seems as though there’s money waiting to get in and people do not want to wait for a five percent drop because it is not getting there,” he said.

Energy shares finished the day strongly with heavyweight Royal Dutch Shell rising one per cent after BP backed a move by the firm to head off a liquidity crunch in the Brent crude market.

Consumer staples such as food retailers added 4.5 points to the FTSE 100 with Tesco up 1.5 per cent after Exane BNP Paribas upgraded the firm to “neutral” from “underweight” on valuation grounds, and saying that downside risks have also been reduced.

Online grocer Ocado jumped 7.5 per cent, extending recent gains following its trading update last week and on rehashed talk of a large retailer without online presence possibly making a bid for the company.

“There has been talk doing the rounds for a while that someone like Morrisons (without an online presence) potentially bidding for Ocado, but the positive update last week has forced many bearish houses to turn more positive on the stock,” a London-based trader said.

Wm Morrison shares rose 2.4 per cent. Ocado, meanwhile, remains heavily shorted, with 77.5 per cent of lendable shares out on loan as of

7 February – the highest utilisation rate for any FTSE 250 company, according to Markit data.

Financials – a broad based sector including banks, insurers and asset managers – added 5.6 points to the FTSE 100.

Barclays rose one per cent after it was reported the bank was seeking to cut spending by £2bn – a tenth of its annual cost base ­– ahead of results out today.

Among the insurers Admiral Old Mutual and Prudential and Resolution rose as much as 1.7 per cent after BofA Merrill Lynch said it remained relatively bullish on the UK names.