Britain's FTSE holds steady as StanChart mutes early bounce

Wed Dec 4, 2013 4:22am EST

* FTSE 100 flat

* Tesco and Sage rally strongly after results

* Standard Chartered drops after warning of flat income

By Alistair Smout

LONDON, Dec 4 (Reuters) - Britain's top share index held steady on Wednesday, after an early boost from Tesco reporting sales in line with expectations and well-received results from Sage Group was muted by a weak update from Standard Chartered.

Tesco rose 2.6 percent, adding the most points to the FTSE 100 index. It reported a decline in British sales but did not issue a profit warning, expectations of which had forced its shares 8.9 percent lower over the last 15 days.

"To me the results are still a worry but judging by the price movement both this week and throughout November this is clearly already more than priced in," said Toby Morris, senior sales trader at CMC Markets.

"I suppose in the context of the last couple of years hitting estimates is a bit of a win, but long term they continue to shed market share and the various plans they have outlined to combat that don't seem to be taking hold."

Sage Group surged 8.3 percent to its highest level since 2001 after announcing it was set to double its growth rate from 2012, with traders citing 6 percent increase in dividend as helping gains.

However, the FTSE 100 gave away early gains to trade flat at 6,532.84 after Asia-focused bank Standard Chartered said its income this year was likely to be similar to 2012 after a slowdown in Asian growth in the last five months.

After the update came out at 0815 GMT, Standard Chartered slid to the bottom of the FTSE 100, down 4.4 percent and taking 4.8 points off the index.

The likes of Aberdeen Asset Management, National Grid and Severn Trent rivalled StanChart among top fallers after going ex-dividend on Wednesday, after which investors will no longer qualified for the latest dividend payout. In all, ex-divs took 3.88 points off the index, according to Reuters calculations at current market prices.

While the index struggled to make progress in early trade, Mike van Dulken, head of research at Accendo Markets, saw good support for the index at 6,500.

"The fact we had a bounce close to 6,500 is a good sign, but we have to overcome a falling channel around 6,650, and there may be resistance at 6,615, so we may have to wait until Friday to see whether we're going to break out," he said.

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