BRITAIN’S top share index edged higher yesterday after a volatile session, as signs of potential compromise in US budget talks reversed early falls over fears that negotiations had stalled.
The FTSE 100 initially extended losses in afternoon trading, with a weak US open and disappointing housing data compounding caution that had been instilled when a Democratic senate leader said there had been “little progress” in US budget discussions.
However, stocks staged a major rally in the last hour of trading, gaining 0.7 per cent after US House Speaker John Boehner said he was “optimistic” that a deal with Obama could be reached to avert the “fiscal cliff” of spending cuts and tax hikes.
At the close, Britain’s FTSE 100 was up 3.57 points, or 0.1 per cent at 5,803.28 points, having hit a session low at 5,755.23, or a 0.8 per cent loss, shortly before Boehner’s comments.
Defensive stocks benefited most, with United Utilities among FTSE 100 leaders. It rose 2 per cent after the multi-utility posted a rise in first-half revenues and said it was on track to meet regulatory outperformance targets.
BP staged an afternoon recovery to close down only 0.8 per cent at 429.4 pence, despite losing 2.9 per cent in the minutes after it was suspended from new contracts with the US government.
The stock was one of the most heavily traded on the index, trading over twice its average 90-day volume, having reversed early gains that had been made after the successful sale of North Sea assets to Abu Dhabi.