G4S bid report helps FTSE 100 extend winning run
* FTSE 100 up 0.2 pct as Fed seen keeping policy easy
* G4S gains on bid talk over cash solutions business
* Biggest weekly inflows for equity in two years - EPFR
* Food and drink stocks, financials the only fallers (Adds quote, detail, updates prices)
By Alistair Smout
LONDON, Oct 21 (Reuters) - Britain's top share index rose on Monday, led by G4S on talk of a bid for one of its businesses in a market supported by prospects of an extended run of ultra-easy U.S. monetary policy.
G4S rose 3.3 percent after a newswire report that British private equity group Charterhouse Capital Partners was considering a 1 billion pound ($1.6 billion) offer for G4S's cash solutions business.
The FTSE 100 index rose 0.2 percent to 6,635.89 by 1026 GMT, gaining for the eighth straight session and around 3 percent off May's closing high for the year, which was a 13-year peak.
The index has risen around 4.7 percent in the last seven days after hitting its lowest since July, with demand supported by expectations the Federal Reserve will keep its stimulus in place for the time being following the U.S. fiscal standoff.
"I think the trend will be to push on higher, because recent events have pushed (Fed) tapering back well into next year," Zeg Choudhry, head of trading at Northland Capital Partners, said.
"There are still concerns heading into year end, and we'll be looking at the earnings season closely, but we should definitely top the (May) high by year end."
Choudhry said he would be watching a flood of U.S. data this week, delayed by the 16-day government shutdown and starting with jobs numbers on Tuesday.
But he questioned how much light the data would shed on the disruption caused by the shutdown, and anticipated the easy monetary policy would continue even if a stronger employment picture emerged for September.
Fund flow data backed up the view that equity-friendly central bank bond purchases would continue to support the asset class, as equity funds posted their biggest weekly inflow since mid-third-quarter 2011, according to EPFR data.
The start of the earnings season has also delivered support to equities, with 63 percent of firms in Europe that have reported so far beating expectations.
But analysts are still cutting their forecasts for company earnings. For the companies that have reported, fourth-quarter outlooks have been trimmed by an average of 4.2 percent, which could reduce momentum for the asset class.
UBS highlighted expensively valued and emerging market-exposed beverage and food producers as at risk this earnings season, while Goldman Sachs recommended buying growth-sensitive stocks with exposure to developed markets over emerging ones.
The food and beverage sector was one of only two in negative territory, along with financials, which were hit by a drop in Royal Bank of Scotland.
RBS was the top faller, down 5.3 percent as amid uncertainty over the future make-up of the part state-owned UK lender. The Daily Telegraph reported on Friday that finance minister George Osborne was considering breaking up the bank.
(Editing by John Stonestreet)
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