UK's FTSE lifted by utility stocks and Compass Group

Wed Nov 27, 2013 4:07am EST

* FTSE 100 up 0.2 pct in early session trading

* Utd Utilities rises after H1 profit rise and dividend hike

* Share buyback lifts Compass Group

* Traders stick to view of market rally in December

By Sudip Kar-Gupta

LONDON, Nov 27 (Reuters) - Britain's benchmark equity index edged up on Wednesday, helped by gains in utility stocks after United Utilities posted higher interim profits and by a rise at Compass Group.

Several traders and investors stuck to their view of a year-end rally for the UK stock market, which could lift it back towards 2013 peaks reached earlier in the year.

The blue-chip FTSE 100 index rose by 0.2 percent, or 12.07 points, to 6,648.29 points in early session trading.

United Utilities moved onto the FTSE's leaderboard with a 1.8 percent gain after its profit rise, helping drag up rival utility stocks such as Centrica and National Grid .

Catering and services company Compass Group also rose 1.6 percent after launching a 500 million pound ($810 million) share buyback.

United Utilities raised its interim dividend to 12.01 pence from 11.44 pence, highlighting the dividend appeal of utility stocks. According to Thomson Reuters StarMine data, the utility sector offers a dividend yield of 4.8 percent - above an average 3.3 percent dividend yield for the FTSE 100 overall.

"Utility stocks are worth having in your portfolio because they pay good dividend yields," said EGR Broking managing director Kyri Kangellaris.

The FTSE 100 is up by around 13 percent since the start of 2013, although it has flatlined in November as some investors trimmed back equity holdings in order to cash in on the rally so far.

However, several traders felt the FTSE would regain ground in December, supported by signs of a recovery in the UK economy and by major central banks sticking to policies aimed at lifting the global economy.

EGR's Kangellaris felt the FTSE 100 would end 2013 at the 6,750 point level - below a 13-year peak of 6,875.62 points hit in late May - but Hartmann Capital trader Basil Petrides felt it could end 2013 at a record high of 7,000 points.

"We're still in a bull market cycle," he said.

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