Britain's FTSE steadies; BP, AstraZeneca advance

Fri Mar 22, 2013 5:59am EDT

* FTSE 100 steadies after 5-days of losses

* BP, AstraZeneca advance 2.6-2.7 pcercent

* Investors stay cautious on Cyprus jitters

By Atul Prakash

LONDON, March 22 (Reuters) - Britain's top share index steadied on Friday after losses in the previous five sessions, as gains for BP and AstraZeneca helped underpin the market.

BP rose 2.6 percent after announcing an $8 billion share buy-back programme to reward investors after it sold its stake in its Russian unit TNK-BP.

AstraZeneca advanced 2.7 percent as new CEO Pascal Soriot received favourable reviews from analysts after a marathon eight-hour strategy update.

Growing nervousness about Cyprus's possible exit from the euro zone kept gains in check, however. The European Union gave Cyprus till Monday to raise the billions of euros it needs to secure a bailout or face a collapse of its financial system that could push it out of the euro zone.

"Cyprus remains front and centre. The uncertainty being created continues to unnerve investors," Keith Bowman, equity analyst at Hargreaves Lansdown, said.

"Given the upward run in the markets, some selective profit taking appears sensible, but with central banks around the world still highly accommodative, equities remain favoured."

At 0930 GMT, the FTSE 100 index was flat at 6,388.08 points, down from a five-year peak hit earlier this month. The index, which has fallen 1.3 percent this week, is on track for its biggest weekly loss since November.

But the index has not witnessed a very steep sell-off in the past sessions despite fresh concerns related to the euro zone and is still up more than 11 percent from a November low, leading some investors to believe it might recover soon.

"The FTSE 100 has been drifting in recent sessions. But we are seeing no signs of panic. We continue to believe equities are in an uptrend and would buy these dips," said Paul Kavanagh, chairman and partner of Killik Capital.

Cyprus's banking troubles put pressure on the banks listed in London. Royal Bank of Scotland, Lloyds and HSBC fell 0.6 to 3.5 percent.

Some analysts advised caution and said investors should be prepared for further declines in the medium term.

"The sell-off over the past days has been a culmination of a few things - European PMIs missing consensus, technically overbought markets and the Cyprus fiasco, causing investors to pause," H2O Markets chief market strategist Mike Jarman said.

"My view is to expect a pull back to the 6,000-6,100 area within the second quarter. From this point 'new money' will want to enter the markets based on a technical role reversal play, but we'll have to watch the fundamentals first and see how the market is responding to current global risks." (Editing by Catherine Evans)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.