HSBC and Glaxo push UK's FTSE back near 13-year highs

Tue May 28, 2013 12:20pm EDT

* FTSE 100 closes up 1.6 pct
    * Gains for HSBC and Glaxo add most points to index
    * Overall sentiment still positive towards equities
    * Use market falls to buy on the dip -Logic Investments

    By Sudip Kar-Gupta
    LONDON, May 28 (Reuters) - Britain's benchmark equity index
rebounded back towards near 13-year highs on Tuesday, led by
gains in heavyweight bank HSBC and pharmaceuticals
group GlaxoSmithKline.
    While some traders felt a near-term pullback was possible,
many said the equity market's longer-term upwards trend remained
intact, buoyed by pledges of monetary stimulus from major
central banks.
    The blue-chip FTSE 100 closed 1.6 percent, or 107.67
points, higher at 6,762.01 points.
    The FTSE hit its highest level in nearly 13 years last week
but then fell 2.7 percent in two days after the U.S. Federal
Reserve said it was considering exit strategies from its
economic stimulus programme.
    The Bank of Japan and European Central Bank, however, have
indicated in recent days that they plan to maintain stimulus and
that has helped reassure investors.
    Darren Easton, director of trading at Logic Investments,
advocated using days when the market fell to buy up stocks at
relatively cheap prices, rather than placing "short" trades to
bet on a more prolonged market fall.
    "I think there are a lot of traders who are worried about
going 'short' right now. There are investors out there who were
waiting for a dip and have now moved in to buy," he said.
    
    HSBC, GLAXO RISE
    HSBC and Glaxo added the most points to the FTSE 100. HSBC
recovered from a 2.1 percent fall on Friday to rebound by 2.4
percent while Glaxo rose 1.9 percent after Deutsche Bank
upgraded the stock to "buy". 
    The market was closed on Monday for a public holiday.
    Brown Shipley fund manager John Smith said both HSBC and
Glaxo were among his favoured stocks, with the two seen as
relatively "defensive" given their diversified set of earnings
from a broad range of economies and solid dividend payouts.
    "HSBC is benefiting from its exposure to an economic
recovery in the United States, and we also like consumer goods
stocks such as Diageo, and BAT (British American
Tobacco) along with Glaxo," said Smith.
    Smith was wary of adding to equity positions at current
levels, adding he would look to take profits on the rally so
far, with the FTSE up 15 percent since the start of 2013.
    Easton, however, saw few obstacles preventing the FTSE from
hitting a record high of 7,000 points if it quickly resumed to
trading back above the 6,800 point level.    

 (Editing by Susan Fenton)