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* FTSE 100 index closes up 1.5 percent
* Index has risen on first day of 16 of past 18 months-BTIG
* Coutts estimates fair value at 6,550 vs current 6,266
* Volumes light at 84 pct of 90-day daily average
By Toni Vorobyova
LONDON, July 1 Britain's top share index rose on
Monday, with strong domestic and global data encouraging fresh
bets on industrial and construction stocks on the first day of
the new quarter.
Building materials supplier Travis Perkins -
promoted to the FTSE 100 last month - and DIY retailer
Kingfisher benefited from signs of a pick-up in the
housing market, with mortgage approvals at a 3-1/2 year high in
May and house prices on the rise.
Meanwhile, news that Britain's manufacturing sector grew at
its fastest pace in two years last month, helped boost companies
such as Melrose, which added 4.5 percent, and BAE
Systems, which rose 3.8 percent.
Solid U.S. manufacturing data from the Institute for Supply
Management also offered some reassurance about the health of the
world's biggest economy, while a weak employment index signalled
that the Federal Reserve may yet keep its stimulus programme in
place for some time to come.
The strong data helped support energy and metal prices,
boosting the FTSE's first and third biggest sectors.
"Some people would put it down to the first trading day of
the month, but I think there is probably a bit more to it," said
Zeg Choudhry, head of equities trading at Northland Capital
Partners. "We had some decent data, gold bouncing off its low
and ... the miners have done quite well today which should give
investors a bit more confidence to come back."
The FTSE 100 gained 92.31 points, or 1.5 percent, to
6,307.78 points, recovering poise after a 5.6 percent
drop in June, its first monthly fall in over a year.
The British benchmark has posted gains on the first day of
16 out of the last 18 months, according to research from BTIG.
Analysts at Coutts said signs of improvement in the British
economy, coupled with a bottoming out in top trading partner
euro zone, boded well for the FTSE 100.
"We estimate the fair value of the FTSE 100 to be 6,550 -
suggesting plenty of room to grow from current levels."
Technical charts also suggested some scope for optimism on
the British stock market, with the 200-day moving average
providing strong support, and analysts saying the market should
have a fairly smooth ride up until resistance around 6,400.
Volumes, however, were light - at around 84 percent of the
90-day daily average - underscoring concerns about the longevity
of the rebound during the historically volatile summer months.
"Heading in to July and August - generally not great months,
when volumes tend to fall off a bit - I am defensively long and
I would look at shorting the FTSE to balance that off," said Dan
Reed, head of CFD trading at Beaufort Securities.
(Editing by Toby Chopra)