FTSE gains on technical buying; focus on U.S. jobs
* FTSE 100 index rises 0.3 percent
* Bounces back from oversold levels
* Focus on U.S. non-farm payrolls data
By Atul Prakash
LONDON, Dec 6 (Reuters) - Britain's top share index rose on Friday on technical buying and a search for bargains after five days of declines, although gains were likely to be limited before a U.S. jobs report.
The blue-chip FTSE 100 index was up 20.10 points, or 0.3 percent, at 6,518.43 points by 0855 GMT, after closing at its lowest in more than three weeks on Thursday. The index is still up 10 percent so far this year.
Analysts said the index's technical outlook remained good despite recent declines. "Oversold" technical conditions had attracted some buyers in early trading, they said.
The FTSE 100's 14-day relative strength index (RSI) fell to 30 in the previous session from 65 a month ago. An RSI below 30 is considered "oversold" and often results in a rebound. About 70 is seen as "overbought".
"The overall trend is still up despite recent falls. You have got a risk of a squeeze lower, but the index is likely to push higher thereafter," Lynnden Branigan, a technical analyst at Barclays Capital, said. "December is generally a good month ... we are still pinning hopes on a recovery later in the year." The market could react to the U.S. data later, he said.
Analysts said the index was likely to trade in a narrow range before the release of U.S. non-farm payrolls at 1330 GMT, which could provide hints about the timing of a Federal Reserve move to trim stimulus measures.
Forecasts are for an increase in non-farm payrolls to 180,000 last month, after October's gain of 204,000. Anything higher may end up hurting equities, by making it more likely the Fed will start to slow its bond-buying operations as early as December.
"If non-farm payrolls post more than 200,000 in jobs, I'd expect the initial knee-jerk reaction to see a market sell-off as taper talks circulate again," Mike Jarman, chief market strategist at H2O Markets, said.
"But any dip presents an opportunity to buy so long as the macro holds. ISMs were strong earlier in the week, suggesting future activity remains robust," he said. The Institute for Supply Management's U.S. factory activity index rose to its highest last month since April 2011.
Among individual movers, British drugmaker Shire fell 1.3 percent. It had reported disappointing clinical trial results of a new dry eye drug that left the product's future unclear.
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