Fed hopes lead UK shares to fresh nine-month high
* FTSE 100 index up 0.2 percent * Energy and materials benefit from improved risk sentiment * Substantial resistance seen before any rise to 6,000 By Alistair Smout LONDON, Dec 12 (Reuters) - Britain's top share index gained on Wednesday as hopes that the U.S. Federal Reserve would continue to provide stimulus for the world's biggest economy lent support to risky sectors. Energy and basic materials, which rise and fall with optimism over the economic outlook, led the FTSE 100 up as the Fed was expected to launch a fresh round of bond buying to the sum of $45 billion a month. At 1123 GMT, the FTSE 100 index was up 12.47 points, or 0.2 percent at 5,937.44, having hit a fresh nine-month high at 5,941.89. The rise took gains for December to 1.2 percent less than halfway through the month, despite recent downgrades to growth outlooks across the UK and the euro zone. "We have seen a continual rally over the last few weeks that seems to discount the prospect of any bad news," said Atif Latif, Director of Trading at Guardian Stockbrokers. "Geopolitical and macro concerns have taken secondary importance and aggressive buying into the year-end seems to be following historical patterns for December trading." A rise in December would be the 10th straight year of gains in the last month of the year. "We also look towards the FOMC and much faith has been placed into their ability to continue asset buying," Latif added. The energy sector added 5 points to the index as oil rose to above $108 a barrel, with investors anticipating renewed monetary stimulus. The materials sector also prospered, with miner Anglo American among the FTSE 100 leaders, ahead by 1.8 percent as it was lifted by a Barclays upgrade to equal weight from underweight. The bank highlighted a 30 percent underperformance by the miner's stock versus peers BHP Billiton and Rio Tinto . "Given the numerous levers that can be pulled, and the fact the big diversified miners don't tend to underperform by more than 30 percent in any given period, we feel the risk/reward is turning less negative," Barclays said in a note. VIVE LA RESISTANCE The index's inability to sustain its session peak highlighted the significant resistance that the FTSE 100 faces. While it broke above 5,932, the intraday high in September, other key levels need to be passed before it can hit 6,000. "There is the potential for plenty of resistance between 5,900 and 6,000 and the index might well need several attempts to achieve the break higher," said Bill McNamara, technical analyst at stockbrokers Charles Stanley. "The next key level is the March closing peak, at 5,965." Also capping the index were ex-dividend factors, which clipped 1.70 points off the FTSE 100 on Wednesday. Babcock International, Polymetal, and Wolseley all traded without entitlement to their latest dividend payout. (Additional reporting by Jon Hopkins; Editing by Catherine Evans)
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