UK's FTSE extends rally for second week on back of U.S. strength

Fri Dec 27, 2013 10:33am EST

* FTSE 100 gains 0.6 percent

* Longest winning streak for index since October

* Index just 1.5 percent off of 2013 high

By Alistair Smout

LONDON, Dec 27 (Reuters) - Britain's top share index rose on Friday, taking its cue from fresh all-time highs hit on Wall Street to notch up its sixth straight day of gains, its longest winning streak in two months.

The gains confirmed a second straight positive week for FTSE 100 returns, and a 4.6 percent rally over the last fortnight has taken the index into positive territory for December.

The FTSE 100 was up 42.85 points, or 0.6 percent, at 6,737.02 points by 1516 GMT, after both the Dow Jones and the S&P 500 scaled record highs on Thursday, when the UK market was shut for the Boxing Day holiday.

The rise made it the UK benchmark's longest winning streak since October, fuelled by optimism that the U.S. economy is strong enough to withstand the gradual withdrawal of monetary stimulus.

Commodity related stocks were among the biggest risers as well as the most heavily traded stocks in an otherwise quiet session that saw a little more than a quarter of the average volume traded with just an hour of trading left.

The basic materials sector, which contains miners and other stocks sensitive to commodity prices, added 9 points to the index's advance, as copper hit a four month high.

"There's a bit of volume coming back into some of the commodity-related stocks, with commodity prices breaking through some important levels," Manoj Ladwa, head of trading at TJM Partners, said, adding that good data out of the United States would help support commodity prices.

"The performance of the U.S. market is helping the UK market, and I'm maintaining a target of 7,000 for the end of the year on the FTSE, as the momentum is there."

In another positive sign for economic growth in the world's largest economy, U.S. jobless claims fell more than expected on Thursday. This followed robust U.S. durable goods orders data released on Dec. 24.

The session's gains left the FTSE 1.5 percent off the 2013 closing high at 6,840, which was a 13-year-high and only just over 100 points from the all-time peak.

"It feels like only a matter of time before we surpass the October high, and might make it there before New Year," Will Hedden, sales trader at IG, said.

"Then with the all time high around 6,950, it seems reasonable that this could be hit during the first quarter of 2014."