Britain's FTSE steadies near highs, focus on data

Wed Jun 4, 2014 4:19am EDT

* FTSE 100 index trades flat
    * Focus on UK services PMI data
    * Caution ahead of Thursday's ECB meeting

    By Atul Prakash
    LONDON, June 4 (Reuters) - Britain's top share index
steadied near a 14-year high in thin trade on Wednesday as
investors held fire before UK data later in the day and
Thursday's European Central Bank's policy meeting.
    The blue-chip FTSE 100 index was flat at 6,837.28
points by 0804 GMT, not far from a recent peak of 6,894.88, the
highest since late 1999 when it set a record high of 6,950.60.
Trading volumes were just 7 percent of the 90-day daily average
in the first hour of trading.  
    Investors looked to the Markit/CIPS services purchasing
managers' index figures, due at 0830 GMT, for near-term
direction. The index is expected to have eased to 58.2 in May
from 58.7 in April, holding well above the 50 threshold that
separates growth from contraction.
    "Today's service sector PMI data is likely to confirm that
Western economies are still expanding and that the growth story
is, by and large, intact," Jeremy Batstone-Carr, head of private
client research at Charles Stanley, said.
    "Clearly investors are awaiting key developments over the
next few days and as a consequence volumes are very thin. Weak
regional inflation data out of the euro zone seems certain to
force the ECB's hand, although nobody knows exactly what form of
(policy) easing will be announced."
    The UK stock market has traded in a narrow range in the past
sessions as investors shield themselves from any disappointment
from the ECB, which is expected to trim its refinancing rate,
send its deposit rate below zero and launch a long-term
refinancing operation targeted at businesses.
  
    The market's focus will also be on the Queen's Speech later
in the day which marks the formal start of Britain's
parliamentary year and sets out the government's agenda.
    Among individual stocks, Mondi rose 2 percent to
1,096 pence, with traders pointing to a price target of 1,325
pence by Jefferies in a positive note, while Tesco 
gained 0.8 percent after a trading update.
    Tesco, Britain's biggest retailer, saw the worst quarterly
drop in underlying sales in its home market since Chief
Executive Phil Clarke took over in 2011. But the numbers were
better than some analysts had feared. 
    "The shares are enjoying a brief respite after an update
which provided weak like-for-like sales numbers, yet not quite
as poor as had been feared," Richard Hunter, head of equities at
Hargreaves Lansdown Stockbrokers, said in a note.

 (Reporting by Atul Prakash; Editing by John Stonestreet)
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