British shares pauses, lag continental peers

Mon Aug 12, 2013 11:02am EDT

* FTSE 100 down 0.1 pct at 6,579.59 pts
    * Index's failure to break 6,600 points to fading momentum
    * Lags Euro STOXX 50 since start of August
    * Prudential leads financial rally

    By Francesco Canepa
    LONDON, Aug 12 (Reuters) - Britain's top shares index closed
little changed on Monday as profit takers sold airlines and
technical traders cashed in on signs of fading conviction among
buyers.
    The FTSE 100 was down 3.8 points, or 0.1 percent at
6,579.59 points, with technical sellers dragging down the index
after it failed to break 6,600, a level that has capped its
value since last week.
    A new failure to break this resistance was seen as a sign of
waning appetite for FTSE shares after the index rallied 12
percent since the start of the year, outpacing a 7 percent
increase in the euro zone Euro STOXX 50 index.    
    "Markets are generally paused," said Lorne Baring, managing
director of B Capital, which manages $500 million worth of
assets and has a small "overweight" position in the FTSE.
    "The UK has already been an outperformer this year and it is
only natural that it can pause in August."
    UK blue chips are down around 0.7 percent since the start of
August, lagging a 2 percent rise for the Euro STOXX 50, as
investors fretted about a possible reduction of British and U.S.
monetary stimulus in coming months.
    With little in the way of corporate news, traders focused on
some of the year's best performers to take some profit.
    Airline EasyJet and IAG, which had risen
nearly 80 percent since the start of the year, were the top FTSE
fallers on Monday.
    EasyJet traded at 14 times its expected earnings for the
next 12 months, the highest multiple since 2009.
    "It's probably at the higher end in terms of valuation
(range)," said Sam Dobson, an analyst at Macquarie Research,
recommending German-listed Lufthansa instead.
    Insurer Prudential, up 3.6 percent, helped the FTSE
limit its losses, adding 4.3 index points and leading a rally in
financial stocks after raising its interim dividend on a 22
percent rise in first-half operating profits.   
    Trading volume was thin on Monday at around 45 percent of
the index's full-session 90-day average, meaning the size of any
move could be magnified by a lack of liquidity in the market.

 (Editing by John Stonestreet)
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