Profit-taking cannot halt FTSE as it hits highest close since May 2008

BRITAIN’S top share index closed above the 6,100 resistance level for the first time since 22 May 2008, yesterday, recovering from a late wobble after a choppy trading session.

The FTSE 100 index was up 2.86 points, or 0.1 per cent, at 6,101,51, having seen some late profit-taking erased in the closing auction, but the gains seemed fragile to traders.

“The index is looking toppy at the moment, providing an opportunity for traders to book profits,” said Ishaq Sidiqqi, market strategist at ETX Capital.

“It is likely we will see a retreat in Friday’s session, particularly with (UK) manufacturing and industrial production numbers out which may be a lot uglier than expected after the recent slide in PMI services data.”

Banking was the top performing blue chip sector as it drew continued strength from the recent decision by regulators to water down liquidity requirements.

HSBC added 0.5 per cent, alone providing nearly all of the blue chip’s points gain, after saying its $9.4bn deal to sell its stake in Chinese insurer Ping An remains on track, scotching recent media reports that the sale had run into trouble.

Emerging markets-focused peer Standard Chartered also saw good gains, ahead 0.8 per cent, with traders citing the impact of an upgrade in rating by Societe Generale to “buy”.

Chip designer ARM Holdings was the top blue chip riser, up 4.4 per cent, lifted by rumours of a new, cheaper Apple iPhone, which uses the firm’s products.

A reversal by miners was a big drag on blue chip sentiment, with the sector running into profit-taking late on after gains earlier following trade data from China which showed exports from the world’s top metals consumer recovered in December.

Commentators pointed out that weak money supply data illustrated some slowing of the pace of growth in China, with a glut of further data due from the country over the next week.

“The trade data points to continued economic growth, underpinning our positive view on the likes of the mining sector, but the slowing in growth of money supply may erode expectations for further acceleration of the Chinese economy in the second half of 2013,” Shore Capital market strategist Gerard Lane said.

Blue chip retailers were again the big focus in London following trading updates from both Tesco and Marks & Spencer with the picture on the UK high street mixed.

Tesco rose 1.8 per cent after the world’s third largest retailer posted its highest sales growth in three years, offering signs that a turnaround strategy is beginning to show results.

Peer Marks & Spencer, however, was a blue chip faller, down 0.6 per cent after reporting a steep drop in its non-food sales in the Christmas quarter, leading Espirito Santo Investment Bank to cut its rating to “sell” from “neutral”.

“M&S has disappointed investors many times and though the reasons have varied – rain, Olympic distraction, buying mistakes, competitor promotions et cetera – the conclusion seems increasingly clear that customers are just not happy with M&S’s product and value,” Espirito Santo said in a note.

Volume in M&S shares was by far the biggest on the FTSE 100 index, at over four times its 90-day daily average, with total blue chip volume at around 108 per cent of its daily average.

Global distribution and outsourcing firm Bunzl was also among the top risers, ending up 3.35 per cent. The firm “has received a number of positive broker comments including an upgrade by Numis,” noted CMC Markets’ Michael Hewson.