British shares up from 5-1/2 month low, helped by Chinese central bank
LONDON (Reuters) - Britain's FTSE 100 rose from 5-1/2 month lows on Tuesday, with investors seeing value in some stocks after the recent rout and with sentiment lifted by efforts by China to reassure markets over money supply.
Following a squeeze in Chinese money markets and a slump in stocks, its central bank said it will guide market rates to reasonable levels, and that recent liquidity issues were due to seasonal factors.
The comments offered some reassurance to global equity markets, which also took heart from two top U.S. Federal Reserve officials late on Monday downplaying the likelihood of an imminent end to monetary stimulus.
"Everything has opened on a fairly positive note this morning ... The market at the moment is very reactive to all the issues... be it the Fed or China," said Neil Marsh, strategist at Newedge.
"...Hopefully, over the next week or two it will all calm down and markets will go back to steadily moving higher."
The FTSE 100 was up 36.40 points, or 0.6 percent, at 6,065.50 points by 0747 GMT .FTSE, recovering some poise after sinking some 12 percent over the past month on concerns about an end to the era of easy global central bank stimulus.
The rebound helped the UK benchmark move just out of oversold territory on the 7-day relative strength indicator, though technical analysts said it was too soon to turn positive.
"The fact that the 200-day moving average has now been breached for the first time since November demonstrates the extent to which the bears are having it all their own way at the moment and it is hard to escape the impression that they will be aggressively selling into any rally that follows," Bill McNamara, analyst at Charles Stanley, said in a note.
"In other words, although a bounce now looks likely the chart is still pointing towards a retreat below 6,000 in the medium term."
U.S. durable goods, new homes sales data and a number of regional sentiment surveys could offer more clues on whether the world's biggest economy is really strong enough to warrant a scaling back of equity-friendly stimulus from the Fed.
The United States - which accounts for around a quarter of FTSE 100 revenues - has become an increasingly key area for earnings growth at a time when other parts of the world suffer.
Weak volumes growth in Europe and South America hurt performance at Rexam (REX.L), with the beverage can maker down 4.1 percent after warning that first half operating profits would be lower than last year.
(Editing by John Stonestreet)
(This story is refiled to correct analyst's name in 8th paragraph)