FTSE's gains held back by weaker easyJet

Tue May 13, 2014 10:19am EDT

* FTSE 100 flat; briefly touched 14-year high

* EasyJet hit by post-results profit-taking

* AstraZeneca up; Pfizer hints at improved offer

* Rise in Taylor Wimpey buoys house-building stocks

By Tricia Wright

LONDON, May 13 (Reuters) - Britain's top share index lost ground after touching its highest level in more than 14 years on Tuesday, with easyJet among the biggest decliners as investors took profits on the airline after a powerful rally.

EasyJet has jumped around 50 percent over the last 12 months, but it fell 4 percent after posting a first-half loss that beat forecasts. Its drop made one of the biggest dents on the UK benchmark in terms of points.

"EasyJet's one of my favourite stocks, but they've had a fantastic run," said Joe Rundle, head of trading at ETX Capital, "Just a bit of profit-taking; looks like it should bounce around 16 quid." The shares are trading at 1,664 pence.

The broader FTSE 100 rose 2.72 points - flat in percentage terms - to 6,854.47 points by 1401 GMT. It reached 6,877.39 points earlier on, taking it past last year's peak of 6,875.62 points, which was its highest level since early 2000.

FOREX.com technical analyst Fawad Razaqzada reckoned there was scope for the index to hit 6,950, the record peak set in 1999, and then the 7,000 level. "But we could go far beyond those levels over the medium term," he said.

Strength in AstraZeneca helped to steady the index. U.S. rival Pfizer suggested it could increase its offer of 50 pounds ($84.4) a share for the British drugmaker if AstraZeneca would only engage in talks.

AstraZeneca, which has surged more than 20 percent since Pfizer indicated in April it wanted to buy the firm, rose 1.2 percent to 4,666 pence.

House-building shares also outperformed. Barratt Developments rose 2.9 percent and Persimmon advanced 2.6 percent after smaller rival Taylor Wimpey said sales rates were at the upper end of its expectations, sending its shares up 7.6 percent.

Some analysts said the sector's gains, which have seen the Thomson Reuters UK Homebuilding index rise almost 70 percent since the start of 2013, might fade on prospects of an interest rate rise in Britain next year.

"I'd be tempted to sell into any rallies on the housebuilder shares," said Beaufort Securities sales trader Basil Petrides.

Petrides also expected the FTSE 100 to hit a record of 7,000 points at some time later this year but added the index had to first sustain a break past its May 2013 high of 6,875.62 points. ($1 = 0.5927 British Pounds) (Additional reporting by Sudip Kar-Gupta; Editing by Larry King)