FTSE extends rally as Hammerson points to UK recovery

Mon Feb 17, 2014 7:23am EST

Related Topics

* FTSE 100 up 1 pct

* Hammerson tops FTSE after increase in net asset value

* Miners receive China boost to extend strong start to 2014

* Troubled RSA lifted by turnaround optimism

By Alistair Smout and Joshua Franklin

LONDON, Feb 17 (Reuters) - Britain's top shares advanced on Monday to extend a two-week rally, with stocks that are sensitive to optimism over the economy receiving a boost from signs of growth both domestically and abroad.

Hammerson rose 4.4 percent to its highest level since 2008 after the shopping centre landlord posted a 5.7 percent rise in net asset value, with its malls benefiting from a recovering British economy.

The stock was the top riser on the FTSE 100, which was up 69.89, or 1.1 percent, at 6,733.51 points by 1159 GMT.

No sectors were in negative territory, and only 11 individual stocks fell.

Miners rose 1.3 percent after data showed China's banks disbursed the most loans in any month in four years in January, suggesting growth may not be cooling as much as some fear. China is the world's biggest metals consumer.

The news was the latest sign of calm in emerging markets, concerns over which knocked 6 percent off the FTSE at the end of January. The index has rallied 4.5 percent in the two weeks since the index touched its low for the year so far.

"The diminution in the emerging market turmoil is probably the main driver, (and there is) a slight sense of risk-on," said Jeremy Batstone-Carr analyst at Charles Stanley, referring to the outperformance of growth-sensitive stocks.

So-called cyclical stocks in the basic materials, financial and energy sectors, which tend to rise with optimism over the economy, combined to add 34 points to the index.

Strength in the miners helped the FTSE outperform the German DAX and French CAC, which traded roughly flat.

The sector is up 7.6 percent so far in 2014, having fallen 16.4 percent last year.

"I'm interested in the rally we're seeing in materials companies, which are one of the better performing sectors of the year, having been the worst, globally, last year," said Mike Ingram, analyst at BGC Partners.

"The market has brushed off any concerns that there had been over growth ... but there are concerns remaining over structural overcapacity, as well as how sustainable any demand recovery will turn out to be."

Leading financials higher was RSA, up 2.8 percent on investor optimism that the troubled British insurer is close to finding a way to effectively plug a 200 million pound ($335 million) hole in its balance sheet.

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