RSA rallies as UK's FTSE gains ground

Tue Aug 26, 2014 6:16am EDT

* FTSE 100 up 0.2 pct

* RSA buoyed by Bank of America Merrill Lynch upgrade

* Antofagasta falls after posting lower H1 profits

By Sudip Kar-Gupta

LONDON, Aug 26 (Reuters) - Britain's top equity index rose on Tuesday, boosted by expectations of new economic stimulus measures from the European Central Bank, while a broker upgrade lifted insurer RSA.

The blue-chip FTSE 100 index was up by 0.2 percent, or 12.76 points, at 6,788.01 points by the middle of the trading day.

The London market was closed on Monday, and its gains on Tuesday saw it play catch-up with an advance seen in Europe in the previous session after ECB President Mario Draghi raised expectations of new stimulus measures, such as quantitative easing (QE), in a speech late on Friday.

"We're just playing a bit of catch-up with the rest of Europe. If QE is on the way in Europe, it should help stock markets across the board," said Terry Torrison, managing director at McLaren Securities.

RSA was the best-performing FTSE 100 stock in percentage terms, rising 2.2 percent after Bank of America Merrill Lynch raised its rating on RSA to "buy" from "neutral."

However, shares in copper miner Antofagasta fell 3.8 percent after Antofagasta posted an 11.5 percent decline in first-half core profits.

Some traders said the FTSE looked set for more gains in the near-term.

The index is up by some 4 percent from a low hit more than two weeks ago following a sell-off triggered in June by the worries over the crisis in Ukraine, where Kiev forces have been fighting pro-Moscow separatists.

"The broader technical picture is now implying that upward momentum is such that further near-term gains have become a realistic expectation," said Bill McNamara, technical analyst at brokerage Charles Stanley. (Additional reporting by Tricia Wright; Editing by Hugh Lawson)