* FTSE 100 up 1.7 pct, recoups Monday's entire losses
* Ease in geopolitical tension triggers relief rally
* Ashtead, Glencore surge on encouraging earnings
By Atul Prakash
LONDON, March 4 Britain's top share index
rebounded from two-week lows on Tuesday, recouping its losses in
the previous session, with the perception that tensions between
Russia and Ukraine were easing and robust earnings boosting
investors' risk appetite.
However, investors remained cautious in placing strong bets
on the sustainability of the share rally, given that Russia and
the West remained at loggerheads over Russia's actions in
Ukraine. Russian President Vladimir Putin gave orders to end an
army exercise and said the use of force was a choice of "last
But he added that Russia reserved the right to intervene if
there was "lawlessness" in Russian-speaking eastern Ukraine.
"The conflict had the potential to become very ugly as
global superpowers were getting involved, but easing tensions
have provided investors some confidence to return back and take
the market to the level from where yesterday's sell-off
started," Marc Kimsey, senior Trader at Accendo Markets, said.
"Although the market's medium-term outlook remains positive,
its near-term direction will depend on economic data releases
and company earnings."
The blue-chip FTSE 100 index closed 1.7 percent
higher at 6,823.77 points after falling 1.5 percent on Monday
after Putin's secured parliamentary approval to send Russian
forces into Ukraine.
The threat provoked a global equities sell-off on Monday,
with investors shunning riskier assets such as equities.
However, easing tensions and strong corporate earnings attracted
a lot of buyers back into the market.
"Geopolitical issues aside, investors' main focus remains on
the performance of the corporate sector. There are some signs of
life from this reporting season and we do see the earnings
picture improving from here," Robert Parkes, equity strategist,
HSBC Securities, said.
Equipment hire group Ashtead spiked 13 percent to
the top of FTSE 100 risers' list after increasing its
third-quarter profits by 51 percent and raising its full-year
profit target. Natural resources firm Glencore Xstrata
rose 1.7 percent on forecast-beating
Lex van Dam, hedge fund manager at Hampstead Capital, said
he believed the market's short-term direction would be higher
because world powers had nothing to gain from a conflict over
Ukraine and so the crisis was not likely to get worse.
Analysts stressed that the market swings caused by the
tensions in Ukraine should be seen in the context of the recent
market rally, which has seen the UK benchmark index bounce
nearly 6 percent off lows hit at the start of February.
That has left the FTSE 100 trading on a 12-month forward
price/earnings ratio of 13.6 times, against 12.9 times at the
beginning of February, Thomson Reuters Datastream shows.
"Equity valuations are back up at the top of their recent
range so when you get a left-field shock the impact is more
dramatic than it would have been if we hadn't had that run,"
Peel Hunt equity strategist Ian Williams said.