UK's FTSE rallies on glimmers of Ukraine peace moves

Wed Sep 3, 2014 7:29am EDT

* FTSE 100 up 0.8 pct, having earlier hit new 2014 peak

* Stock markets buoyed by signs of Ukraine peace moves

By Sudip Kar-Gupta

LONDON, Sept 3 (Reuters) - Britain's top equity index touched its highest level in more than 14 years on Wednesday, as signs that Ukraine and Russia were working on peace moves in eastern Ukraine lifted global stock markets.

The blue-chip FTSE 100 index briefly hit a peak of 6,898.62 points, which marked its highest level since early 2000, after Ukrainian President Petro Poroshenko's press office said in a statement that Poroshenko had reached agreement with Russia's President Vladimir Putin on a "permanent ceasefire" in eastern Ukraine's Donbass region.

The FTSE then trimmed some of those gains, after Russian news agency RIA reported that while Putin and Poroshenko had agreed on steps towards peace in eastern Ukraine, where Kiev forces have fought pro-Russia separatists, a ceasefire had not been agreed because Russia is not a party to the conflict.

Nevertheless, the FTSE remained up by 0.8 percent, or 54.15 points, at 6,883.32 points by the middle of the trading day.

"With Russia, things are never black and white. There are some questions in the background about how solid this ceasefire actually is. But if a ceasefire can hold and is confirmed, then we could see a nice move higher," said Dafydd Davies, partner at Charles Hanover Investments.

KEY TECHNICAL LEVEL NOT BREACHED

The UK stock market was also helped by new signs of economic growth in Britain, with data showing that Britain's services industry expanded last month at the fastest pace in nearly a year.

The backdrop of Britain's economic recovery has led many traders to expect that the FTSE 100 will hit a record high of 7,000 points later this year.

However, the FTSE has not yet breached the 6,900 point level - seen as a key hurdle to cross before it can then move on to challenge record highs.

Both Davies and Beaufort Securities' sales trader Basil Petrides said they would trade cautiously in the near term and look to sell out of positions for a profit on days when the market rose.

"I'd sell into rallies," said Petrides. (Additional reporting by Atul Prakash; Editing by Susan Fenton)