* FTSE 100 gains 0.2 percent
* Financials add over 8 points to the index
* Barclays boosted by proposed cuts
* Index rangebound but technical picture looks rosy
By Alistair Smout
LONDON, Feb 11 (Reuters) - Britain’s blue-chip index edged up on Monday, supported by resilient banking shares after posting its first weekly loss this year last week.
Barclays rose 1.4 percent to account for a third of the index’s rise in early trade, with the Financial Times reporting that the bank was seeking to cut spending by 2 billion pounds - a tenth of its annual cost base.
“The reported cuts are what is driving Barclays this morning. However, we’ve not seen the same positive movements in the credit or options market, where Barclays has performed much as any other large European bank,” Simon Maughan, strategist at Olivetree Financial Group, said.
“Equity markets are all aflutter about (CEO Antony) Jenkins’ presentation tomorrow, while credit and option markets expect nothing to change.”
Financials - a broad based sector including banks, insurers and asset managers - added 8 points to the FTSE 100
By 0916, the index was up 12.19 points, or 0.2 percent, at 6,276.12, having fallen 1.3 percent last week.
The index has traded in a narrow 140 point range for the last 2-1/2 weeks and is still struggling to return to recently established four and a half year highs. Losses spurred by the return of concerns about Italy and Spain’s fate in the euro zone debt crisis have hinted that a bull run at the start of 2013 - January was the strongest since 1989 - has run out of steam.
Nick Xanders, head of European equity strategy at BTIG, said the scandal at Europe’s oldest bank Monte Paschi had added to uncertainty over the outcome of Italian elections, and also pointed to the lack of a deal over spending cuts in the United States.
“The early momentum across the index has waned,” he said. “I think you’ve got to take a little bit of money off the table and I think you’ve got to own a little bit of volatility as protection to the downside, whether its ‘puts’ in the FTSE or in individual names,” he said.
The technical picture still looks relatively rosy.
“The widening of yields in Spain and Italy was a timely reminder that the euro zone retains the potential to send stocks into a sudden swoon. This reversal has, unsurprisingly, caused the FTSE to lose some of its upside momentum - but not to the extent that it has slipped back through its short-term uptrend,” Bill McNamara, technical analyst at Charles Stanley, said in a trading note.
“As long as this line remains intact it is reasonable to assert that the bull case for the UK index is very much ongoing.” (Editing by Patrick Graham)