US budget hope and Christmas cheer push FTSE close to 6,000
BRITAIN’S blue-chip share index scaled fresh nine-month highs yesterday on growing expectations of a US budget deal, and nearing tough technical resistance levels en-route to the 6,000 mark.
Although the US political ping-pong continued, the main parties looked to be closing in on an agreement to avoid the “fiscal cliff” of tax hikes and spending cuts that threaten to depress the world’s biggest economy next year.
A deal would potentially pave the way for a year-end stock rally as investors seek a last-minute boost to their annual returns, which traders said could see Britain’s FTSE 100 reach 6,000 points for the first time since July 2011. Such flows have helped the index gain for the past nine Decembers in a row.
“I don’t see anybody looking to sell the market,” said Max Bascombe, institutional sales trader at Merchant Securities.
“The market will move on the basis of the balance of sentiment but … one way or another something will be muddled through. The States isn’t going to go to the wall. If they don’t come to agreement, everybody loses.”
The FTSE 100 gained 25.69 points, or 0.4 per cent, to finish at 5,961.59.
Banks were the biggest gainers, up 1.8 per cent, on some relief following an as-expected fine for Swiss peer UBS over rigging of Libor interbank rates – a scandal which has also embroiled most of the big UK names.
On the downside Bunzl, supplier of carrier bags and toilet rolls, dropped 4.3 per cent after an update on its 2012 revenue outlook disappointed.