Britain's FTSE inches higher, led by Johnson Matthey

Mon Oct 14, 2013 7:28am EDT

* FTSE 100 up 0.1 percent

* Johnson Matthey rises on bullish JPMorgan note

* RBS falls on broker downgrade, U.S. sale talk

By Tricia Wright

LONDON, Oct 14 (Reuters) - Britain's top shares inched higher on Monday, extending gains from the previous two sessions, led by catalytic converter maker Johnson Matthey on the back of an analyst rating upgrade.

Analyst comments moved the prices of a number of FTSE 100 stocks on Monday while many investors remained preoccupied by the U.S. budget standoff.

Johnson Matthey rose 4 percent as traders cited an upgrade from JPMorgan to "overweight" from "neutral". "Johnson Matthey is at an inflection point," JPMorgan said, seeing potential upside of 35 percent to the current price.

"We expect years of investment in the industrial catalyst market to lead to accelerated growth, benefiting from the swathe of new customer capex driven by Chinese petrochemical self-sustainability and the U.S. shale gas revolution."

Croda and Bunzl, meanwhile, were both off 1.6 percent after downgrades from JP Morgan.

The FTSE 100 was up 9.20 points, or 0.1 percent, at 6,496.39 points by 1052 GMT, having added 2.4 percent over the previous two sessions.

U.S. Senate negotiations to resolve the country's fiscal crisis showed some progress on Sunday and, while there were no guarantees the federal government shutdown is to end, traders expect a deal to lift the borrowing ceiling.

Although the FTSE 100 index dipped below its recent range last week, it staged a rapid recovery, highlighting that there are plenty of buyers willing to step in on weakness.

"The market's telling you that most participants still think a deal's going to get done pretty shortly; every time we dip between half and one percent it immediately gets bid back up again," Matt Basi, sales trader at CMC Markets, said.

Basi reckoned that the UK benchmark could rise by another 200 points heading into year end if a deal were to be clinched in the coming days.

Charles Stanley technical analyst Bill McNamara, while ultimately envisaging a rise of similar magnitude on the FTSE 100, cautions against further nervous trading in the near term.

"If no agreement is reached by Thursday, a re-examination of last week's lows (6,316) looks all too likely," he said.

Congress has until Oct. 17 to raise the debt ceiling, or risk defaulting.

Downbeat analyst comment also weighed on Royal Bank of Scotland on Monday, off 1.6 percent, knocked by a downgrade to "underperform" by BofA Merrill Lynch and negative reaction to media talk of a raid on its U.S. retail banking business, according to traders. (Editing by Ruth Pitchford)

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