EasyJet helps FTSE bounce to top of recent range

Thu Jul 4, 2013 4:16am EDT

* FTSE 100 up 0.9 percent to 6,283.68

* Index stuck in 6,220-6,300 weekly range

* Investors positioned for no change in UK, euro zone rates

* EasyJet up 1.9 pct as update shows passenger growth

By Francesco Canepa

LONDON, July 4 (Reuters) - Britain's top share index rebounded on Thursday, taking its cue from gains in Asian and U.S. stocks and strength in easyJet, although gains were limited by concerns about a political crisis in Portugal.

Low-cost carrier easyJet, up 1.9 percent, was among top gainers after announcing a 1.9 percent increase in the number of passengers in June.

The FTSE 100 was up 53.81 points, or 0.9 percent, to 6,283.68 points at 0749 GMT, extending a late recovery on the previous day after better-than-expected U.S. jobs data, which set a positive backdrop for the release of non-farm payrolls figures on Friday.

Trading volume was expected to be thin on Thursday as the U.S. stock market, the world's largest, was shut for a national holiday.

"The fact (U.S. stocks) closed up on the day does give an underlying sense of the positive sentiment that the U.S. must have towards the ongoing economic recovery, as that evening would have been a good chance to trim risk," Alastair McCaig, analyst at IG Index, said.

"They're heading into it strongly, and Europe is taking its cues from that."

The FTSE sent a bullish signal on Wednesday by climbing back into its weekly range between 6,220 and 6,300 by the close, suggesting residual appetite for shares despite growing concerns about a government crisis in Portugal and turmoil in Egypt.

Traders said the index was likely to stay within that range on Thursday morning since investors were unlikely to make large directional bets before rate announcements by the Bank of England and the European Central Bank.

Investors were positioned for no change to interest rates or to the Bank of England's monetary stimulus programme, but a run of surprisingly positive economic data in Britain has prompted investors to wonder how long it will be before the new governor, Mark Carney, has to think about ending quantitative easing.

There has been some speculation he would break with convention and release a statement even if the bank takes no action.

The market also foresaw some dovish rhetoric from ECB President Mario Draghi after a sudden rise in Portuguese yields.

"We're expecting nothing so if we get anything going against the grain we're going to see some big moves off the back of it," Mike McCudden, head of derivatives at stockbroker Interactive Investor, said. "We're stuck in this range and I don't expect much." (Additional Reporting By Alistair Smout; editing by Stephen Nisbet)

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