UPDATE 1-Britain's FTSE rebounds as Yellen calms taper nerves

Thu Nov 14, 2013 11:47am EST

* FTSE 100 closes up 0.5 percent
    * Yellen says Fed needs to do more to aid economy
    * Burberry gains as H1 sales top 1 billion pounds
    * Centrica falls after warning on earnings


    By Alistair Smout
    LONDON, Nov 14 (Reuters) - Britain's top shares rebounded on
Thursday, led higher by energy stocks after the Federal
Reserve's Janet Yellen eased worries the U.S. central bank may
start scaling back its stimulus programme this year.
    Yellen, in remarks released ahead of the Senate hearing on
Thursday to confirm her as new Fed chair, said the central bank
had "more work to do" to help the economy. That suggests she is
in no hurry to start trimming the bond-buying programme that has
fuelled an equity rally this year. 
    Having trimmed gains throughout the session, the index
received another leg up as her confirmation hearing began.
    "There's some hope that Yellen will prove to be the second
coming of (current Fed chief) Bernanke, and that means a
continuation of the easy money, long equity trade that has
worked so well in recent months," IG sales trader Will Hedden
said. "Based on what she's said, it seems they won't do anything
especially soon."
    With appetite for risk boosted by Yellen's comments,
cyclical stocks such as oil and gas companies 
rallied, adding 8.5 points to the index's gains.
    The FTSE 100 closed up 36.13 points, or 0.5 percent,
at 6,666.13. It had fallen sharply on Wednesday after the Bank
of England gave a stronger forecast for the UK economy, bringing
forward expectations of when interest rates will rise and
sending sterling higher, hitting exporters.  
    British luxury brand Burberry was up 1.8 percent
after first-half sales exceeded 1 billion pounds ($1.6 billion)
for the first time. 
    "The results are another welcome indication of the healthy
position (CEO) Angela Ahrendts leaves the firm in when she
passes the reins onto Christopher Bailey next year," Toby
Morris, senior sales trader at CMC Markets, said in a note.
    However, earnings remain a concern for investors in Europe.
Equities have re-rated above long-term averages, even though
profits and revenues continue to disappoint. 
    Fifty percent of firms in Europe have missed analysts'
earnings forecasts in the third quarter so far, while 63 percent
have missed sales estimates, heaping more pressure on margins.
    British Gas owner Centrica, one of Britain's big six
utilities, under fire from politicians for hiking bills, fell
5.1 percent, topping the list of FTSE fallers. It dragged the
utilities sector lower after it warned that earnings would not
grow this year. 
    Drinks can maker Rexam fell too, down 2.1 percent
after it warned on the outlook for trading in Europe, where it
generates more than 23 percent of its revenues, according to
Thomson Reuters data.