Britain's FTSE at fresh 9-mth highs, aims for 6,000

Wed Dec 19, 2012 7:18am EST

* FTSE 100 index up 0.5 pct, hits 9-month highs

* Traders set sights on 6,000 by year-end

* Banks relieved by UBS fine, cheered by CS upgrade

By Toni Vorobyova

LONDON, Dec 19 (Reuters) - Britain's blue chip share index scaled fresh nine-month highs on Wednesday, putting it within reach of the psychologically important 6,000 mark in the final days of the year and bolstered by growing expectations of a budget deal in the United States.

U.S. politicians look to be closing in on an agreement to avoid the 'fiscal cliff' of some $600 billion of tax hikes and spending cuts that threaten to depress the world's biggest economy next year. The House of Representatives is expected to vote on the latest plan by Thursday.

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 could see Britain's FTSE 100 reach 6,000 points for the first time since July 2011.

A bigger than expected pick-up in German business morale, coupled with a recent run of stronger economic data from China also helped support sentiment on UK-listed globally focused companies.

"End of year window dressing is in full swing," said Steve Asfour, head of sales trading at Fox Davies Capital.

"There have been some positive bits and pieces out of China and out of Germany, so if we get some positive momentum out of the United States, then we could get to 6,000 and even push to 6,100. I do think we will close the year above 6,000."

The UK benchmark was up 32.07 points, or 0.5 percent, at 5,967.97 by 1143 GMT, closing in on its 2012 peak of 5,989.07 points, set in March. That level is likely to set tough technical resistance ahead of the key 6,000 mark.

Banks were the biggest gainers, up 1.8 percent, on some relief following an as-expected fine for Swiss peer UBS over rigging Libor interbank rates - a scandal which has also embroiled most of the big UK names.

Banks also got a boost from a sector upgrade by Credit Suisse, which lifted European banks to 'benchmark' from 'underweight', with a preference for UK names.

"The UK looks particularly appealing because we see some signs of relative resilience in UK GDP growth and, above all, there is better coordination between the central bank and the Treasury than in any other country," Credit Suisse said in its Global Equity Strategy 2013 outlook.

"Our focus would be on Lloyds: we are fundamentally bullish on retail banks and there are clear signs that household lending intentions and house prices are stabilising."

Lloyds was the top FTSE gainer, rising 3.3 percent.

Packaging firm Bunzl, on the other hand, led losers, its shares dropping 4.4 percent after an update on its 2012 revenue outlook pointed to a relatively soft performance in the final months.

Bunzl supplies supermarkets, hospitals and hotels with products ranging from carrier bags to toilet rolls.

"The full-year number implies a fourth quarter that is somewhere around zero to minus 1 percent. When you think that their product is relatively resilient ... it is disappointing," said Will Kirkness, analyst at Jefferies, who rates the stock 'underperform'. (Editing by Susan Fenton)

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