British shares rally broadly after Fed, IMI leads gainers

Thu Aug 22, 2013 7:10am EDT

* FTSE 100 up 0.8 percent
    * IMI leads on brighter outlook
    * Miners boosted by robust China data

    By Tricia Wright
    LONDON, Aug 22 (Reuters) - Britain's top shares recovered
some poise after recent steep losses on Thursday, helped by
mining stocks following encouraging data from top commodities
consumer China and an optimistic outlook from engineer IMI.
    The rally extended across a range of sectors, suggesting a
broad upturn in sentiment as some took the view that the U.S.
Federal Reserve may wait longer than anticipated before winding
down its stimulus programme.
    The FTSE 100 was up 48.98 points, or 0.8 percent, at
6,439.82 points by 1032 GMT, following three straight days of
losses which saw the index shed 1.7 percent.
    IMI rose 4.7 percent to a record high on Thursday
after the company forecast improved trading as it posted a
slight rise in first-half profits boosted by fatter margins at
its severe service business. 
    Europe's second-quarter earnings season is drawing to a
close, with 90 percent of STOXX Europe 600 companies
having reported numbers, of which 55 percent have beaten or met
forecasts, according to Thomson Reuters StarMine data.
    The FTSE 100 has fallen nearly 4 percent from an early
August peak, dogged by uncertainty over when the Fed will start
to scale back its huge bond buying programme which has fuelled a
rally in world equities over the past year.
    But traders say that these declines should be seen in the
context of seasonally thin trading volumes, which can exaggerate
market moves. By mid-session on Thursday the UK benchmark had
traded just a quarter of its already thin 90-day daily average.
    "We still see opportunities... even through this volatility,
namely led by cheap valuations," Atif Latif, director at
Guardian Stockbrokers, said.
    According to Thomson Reuters Datastream, the FTSE 100 trades
on a 12-month forward price/earnings ratio of 12.1 times against
its 15-year average of 14.7 times.
    Expectations that the Fed would start scaling back its
stimulus as early as next month have hit market sentiment.
    But some noted the fact that minutes from the Fed's July
policy meeting, released late on Wednesday, gave little
indication of the timing of a reduction as a positive.
 
    "Tapering might be pushed out by another month or so...
Maybe the sell-off was a little bit overdone going into the
minutes," Mike van Dulken, head of research at Accendo Markets,
said.
    Miners outpaced the market, notching up a 1.5
percent rise after activity in China's manufacturing sector hit
a four-month high in August. 
    Antofagasta and Vedanta Resources, with
respective gains of 2.4 percent and 2.2 percent, were among the
best off, while Kazakhmys rose 0.5 percent despite
posting a more than 35 percent drop in first-half core profit.  
  

 (Reporting by Tricia Wright; Editing by John Stonestreet)
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