Easing Syrian tensions boost UK's FTSE to near 1-month high

Tue Sep 10, 2013 11:19am EDT

* FTSE 100 up 0.8 pct at highest level since mid-August
    * Airlines rise as oil price falls
    * Glencore rises on bigger-than-expected synergies
    * UK data benefits housebuilders

 (Updates to add details, quote)
    By Alistair Smout
    LONDON, Sept 10 (Reuters) - Britain's main share index rose
to its highest level in nearly a month on Tuesday, bolstered by
the outlines of an international compromise to avert a U.S.
strike on Syria, with airlines benefiting as oil prices fell.
    There was also strength in the resources sector after an
upbeat report from miner Glencore Xstrata and robust
Chinese data.
    Budget airline easyJet was the biggest gainer in
percentage terms, up 7 percent after Syria accepted a Russian
plan to put its chemical weapons under international control,
cutting the risk of military intervention. 
    EasyJet rebounded to its highest level in a month, regaining
ground lost earlier in September when fears of instability in
the region first knocked the stock back. Fellow airline group
IAG rose 4.6 percent.
    The FTSE 100 was 54.99 points, or 0.8 percent higher
at 6,585.73 by 1441 GMT. The index has gained 3.1 percent in 12
days, but remains 3.7 percent off 13-year highs hit in May.
    "We've had quite a steep run, and (U.S. Secretary of State)
Kerry's off-the-cuff comments (on Syria's chemical weapons) seem
to have got us into a much better position than anyone could
have imagined... 
    "The price of oil dropped about three dollars in an hour, so
you're going to have the airlines loving that," Mike van Dulken,
head of trading at Accendo Markets, said.
    He said the longer term graph showed some resistance. "Since
the big correction in May, there's a trendline of falling highs
to deal with around 6,630, should we push on."
    Shares in Glencore Xstrata rose 2.3 percent after it upped
its forecast for synergies from last year's merger to at least
$2 billion for next year from initial guidance of $500 million,
and hinted at further savings ahead. 
    Glencore and Rio Tinto, which benefited from a
target price upgrade by JP Morgan, led miners higher, and
combined to add six points to the FTSE 100. 
    "The fact that Glencore Xstrata will see synergies in excess
of $2 billion is giving it a real boost, although there's still
plenty more upside there," Alastair McCaig, analyst at IG, said.
    The mining sector was also boosted after
stronger-than-expected industrial output reinforced other signs
that China's economy is stabilising. 
    Housebuilders including Persimmon were also among
gainers after British property prices recorded their fastest
rise in almost seven years last month and a measure of sales
volumes jumped to a multi-year high. 
    Credit Suisse cited strong economic data as one of the
reasons why it was sticking to its overweight on UK equities.
    "On our macro momentum scorecard, the UK scores second top,"
the bank's analysts wrote in a note, adding that "policy looks
to stay very reflationary", with prospects for more fiscal
easing in the run-up to elections due in 2015. 

 (Additional reporting by Toni Vorobyova; editing by Stephen
Nisbet, John Stonestreet)