* FTSE 100 down 0.5 percent
* Index retreats from resistance as buying momentum fades
* Ex-divs take toll on index
By Francesco Canepa
LONDON, March 13 Britain's blue-chip share index
fell from five-year highs on Wednesday, retreating from a key
technical resistance and leaving some investors bracing for
further falls in the remainder of the month.
The FTSE 100 closed down 29.12 points, or 0.5
percent, at 6,481.50 after failing to break above its January
2008 high at around 6,534 the previous day - a level some
investors were starting to see as a turning point, or "pivot".
The index's 14-day Relative Strength Index, a momentum
indicator, was retreating from "overbought" territory after
hitting a high last seen in early February, when it was also
followed by a selloff.
These were seen as signs buying momentum was beginning to
fade, leading some investors to book their profits on some of
this year's strongest performers, such as security firm G4S
, which retreated from all-time highs.
"We might well have seen the high for March," Andy Ash, head
of sales at Monument Securities, said. "Probably we're going to
He cited concerns about a new debt crisis in Italy, as
highlighted by a weak auction on Wednesday, and difficult fiscal
talks in the United States as possible catalysts for the
The health of the world's largest economy has been a key
driver for the FTSE, which cut losses in afternoon trade on
Wednesday after robust U.S. retail sales data.
It still underperformed its main continental peers, France's
Cac and Germany's Dax, as a number of stocks
started to trade without entitlement to their latest dividend,
including heavyweights British American Tobacco and
Bucking the trend was Britain's biggest insurer Prudential
, which raised its dividend on the back of soaring
profits, sending its shares up 9.3 percent in volume three times
its 90-day average.
Ronnie Chopra, head of strategy at Tradenext, said the rally
provided an opportunity for contrarian trade, built selling
Prudential and buying its struggling rival Aviva, which
cut its dividend earlier this month.
The spread between both companies' share prices hit an
all-time highs on Wednesday, Thomson Reuters data showed, and
Chopra said the valuation gap could revive speculation of a
Prudential bid for Aviva.
"If Prudential wants to be predatory and buy Aviva they
probably wouldn't get a better time in terms of the valuation
disparity between both companies," he added.
(Reporting By Francesco Canepa; editing by Ron Askew)