Buoyant retailers push FTSE 100 up towards 6,300

Mon Feb 11, 2013 7:13am EST

* FTSE 100 up 0.2 percent

* Retailers rise, Tesco gains after Exnae upgrade

* Barclays up ahead of results

* ARM falls on big institutional sale

* Telecity dips ahead of results

By David Brett

LONDON, Feb 11 (Reuters) - Rallying retail stocks helped the FTSE 100 higher by midday on Monday as Britain's blue chip index inched its way back towards the 6,300 level.

By 1200 GMT, the UK's benchmark index was up 15.04 points, or 0.2 percent at 6,278.97, having posted its first weekly loss this year last week.

"Markets opened higher supported by heavyweights early on with the likes of HSBC, Shell GSK. However, as they handed back the gains the FTSE has pared its gains too," Jawaid Afsar, sales trader at SecurEquity, said

"Even so the view still is that any dips should be bought into and only if key support areas are breached should the view change. 6,350-6,400 is still a possibility in the weeks ahead,"

Consumer staples such as food retailers added 4.5 points to the FTSE 100 with Tesco up 1.7 percent after Exane BNP Paribas upgraded the firm to "neutral" from "underweight" on valuation grounds, and saying that downside risks have also been reduced.

Online grocer Ocado jumped as much as 8.1 percent, extending recent gains following its trading update last week and on rehashed talk of a large retailer without online presence possibly making a bid for the company.

"There has been talk doing the rounds for while that someone like Morrisons (without an online presence) potentially bidding for Ocado, but the positive update last week has forced many bearish houses to turn more positive on the stock," a London-based trader said.

Wm Morrison shares rose 1.8 percent. Ocado, meanwhile, remains heavily shorted, with 77.5 percent of lendable shares out on loan as of Feb. 7 - the highest utilisation rate for any FTSE 250 company, according to Markit data.

However, there are signs those shorts are being squeezed - utilisation fell by 2.4 percent on the Thursday, when Ocado announced a rise in underlying earnings, and the stock has continued to rally since then.

BANKS BOOST

Financials - a broad based sector including banks, insurers and asset managers - added 6 points to the FTSE 100.

Barclays rose 1.1 percent with the Financial Times reporting the bank was seeking to cut spending by 2 billion pounds - a tenth of its annual cost base.

"The reported cuts are what is driving Barclays. However, we've not seen the same positive movements in the credit or options market, where Barclays has performed much as any other large European bank," Simon Maughan, strategist at Olivetree Financial Group, said.

"Equity markets are all aflutter about (CEO Antony) Jenkins' presentation tomorrow, while credit and option markets expect nothing to change."

Among the insurers Admiral Old Mutual and Prudential and Resolution rose as much as 1.7 percent after BofA Merrill Lynch said it remained relatively bullish on those UK names despite a strong performance in 2012.

On the downside, chip designer ARM shed 2.7 percent losing ground after a rally that had sent it to a 12-year high, with traders citing a large sell-order from an institution as the principal reason for the stock's decline.

European data centre operator Telecity fell 5.1 percent in good volume with traders citing caution heading into the firm's full-year results due out on Wednesday, with Liberum recommending investors to go short on the stock as 2013 and 2014 estimates look vulnerable to downgrades.

(Written by David Brett/editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)

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