Retailers help FTSE extend winning run into fifth day

Tue Feb 11, 2014 4:20am EST

* FTSE 100 up 0.8 percent

* Strength on high street after robust UK retail sales data

* Focus on guidance as Yellen speaks on Tuesday

* Charts point to further near-term gains on FTSE 100

By Tricia Wright

LONDON, Feb 11 (Reuters) - Britain's top shares rose on Tuesday, gaining for a fifth straight session, bolstered by retailers after robust sales figures ahead of testimony from the new U.S. Federal Reserve chair which investors hoped would reassure on policy.

Home improvement retailer Kingfisher and Marks & Spencer were among the top blue-chip risers, both ahead 2.4 percent, while Next posted a 1.6 percent gain.

British retail sales rebounded last month after a weak December to record their strongest annual growth since April 2011, a monthly industry survey showed.

"They're superb," Joe Rundle, head of trading at ETX Capital, said of the figures.

"Any sign of high street growth, continued economic strength, and people starting to spend money is very good for the retailers, but people are going to be more frugal so the ones that have got better pricing... should be well positioned to move up. I think Kingfisher's in the right price bracket."

The UK benchmark was up 52.97 points, or 0.8 percent, at 6,644.52 points by 0904 GMT, taking its rise from a February low to more than 3 percent.

The first testimony to Congress by Janet Yellen, the new chair of the U.S. Federal Reserve, will dominate the market's attention on Tuesday, with investors keen to hear what she will say about the pace of tapering of equity-friendly asset purchases following mixed U.S. jobs data in the past months.

"I think the market's positioned to expect more of the same in terms of a dovish mentality ... comments about the loose monetary policy remaining in place until such time as the U.S. economy can be left to stand pretty much on its own two feet," Richard Hunter, head of equities at Hargreaves Lansdown, said.

Charts pointed to further gains on the FTSE 100 which this week has broken convincingly above its 200-day moving average, having closed above it on Friday for the first time since Jan. 28.

While Charles Stanley analyst Bill McNamara saw scope for further near-term strength on the UK benchmark, he said it needed to close above 6,650 to confirm that the move is part of a broad rally off the lows and not simply a short-term bounce in a new downtrend.

Babcock International advanced 2.1 percent after the engineering services group reaffirmed its strong fiscal position for the year ahead.

"(A) solid statement... (There has been) much concern that they will not be able to meet FY numbers due to concerns on margin cuts. We see this as an overreaction to the downside and continue to see value in BAB - one of few companies that show strong pipeline growth in what is a tough market," Atif Latif, director of trading at Guardian Stockbrokers, said.

Despite such bright spots, as the European reporting season grinds on, some investors are doubtful that the earnings will justify high valuations after a strong 2013.

Of the 38 percent of European companies to have reported so far, half have missed revenue expecations, while 39 percent have missed profit expectations, Thomson Reuters Starmine shows.

"There haven't been enough companies shooting out the lights to give the markets the next leg up that we'd been hoping for come the end of 2013," Hargreaves Lansdown's Hunter, said.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.