* FTSE 100 up 0.7 percent
* Reckitt tops gainers after Citi upgrade
* Vodafone benefits from M&A chatter in telecoms
* Petrofac slides after Saipem profit warning
By Alistair Smout
LONDON, June 17 Britain's top share index rose
on Monday, as demand for safe-haven consumer staples helped to
lift the FTSE 100 off of six week lows ahead of a U.S.
monetary policy meeting later this week.
The FTSE 100 rose 43.02 points, or 0.7 percent, to 6,351.28
by 0805 GMT, with the consumer staples sector contributing 7
points to the advance.
"Although consumer staples are highly rated and trade at a
premium to others, they're still very attractive because of the
reliable free-cash generation," Jeremy Batstone-Carr, analyst at
Charles Stanley, said.
Leading the sector higher was Reckitt Benckiser, up 2
percent and the top FTSE 100 gainer in early deals after Citi
reiterated a "buy" stance on the company, saying the stock is
currently trading under half of its fair value.
Vodafone, another defensive stock, gained 1.5
percent, adding 5.9 points to the index, after a report that
AT&T made an offer for Spanish peer Telefonica.
Although denied by Telefonica, "any talk of European telco
M&A will always put the concept of the Vodafone stub back in
play," Simon Maughan, strategist at Olivetree Financial Group,
said in a trading note.
The popularity of defensive stocks, resilient to uncertainty
in economic sentiment, reflected caution among traders ahead of
a two-day meeting of the U.S. Federal Reserve beginning on
Markets globally have been roiled in recent weeks after Fed
officials began to openly discuss exit strategies to their
stimulus programme, with the FTSE tumbling 7.2 percent off of a
13 year high.
"Bernanke will probably look to reduce volatility and avoid
speculation over when tapering will arrive, but also that it's
going to be incremental in nature when it does arrive," Ioan
Smith, director at Knight Capital, said.
Gains were broad based, with all but two sectors
contributing to gains.
Petrofac was the top faller, sliding 3 percent as a
second profit warning from Italian peer Saipem in less
than six months rocked the energy services sector again.
(Editing by Toby Chopra)