* FTSE 100 up 0.7 pct, bounces off technical support
* Index set to test 6,840 pts - ING
* Housebuilders lead gainers on bullish Deutsche Bank note
* StanChart rallies as brokers flag cheap valuation
(Updates prices at settle)
By Francesco Canepa
LONDON, April 9 Britain's blue-chip stock index
staged a technical bounce on Wednesday, helped by a rally in
housebuilders as analysts flagged buying opportunities in shares
that have underperformed recently.
The FTSE 100 had shed 1.6 percent over the previous
two days. However, charts showed the trend for the index
remained up and investors were still prepared to buy into market
dips, betting on a recovery in the global economy despite
geopolitical tensions in Ukraine and volatility in emerging
The FTSE closed up 44.92 points, or 0.7 percent, at 6,635.61
points, bouncing from technical support corresponding to its
200-day moving average and a 61.8 percent retracement of its
It was now facing technical resistance at its 50-day moving
average at 6,653 points. A break above that level could pave the
way for a rise towards the index's February peak at around 6,860
"We're still seeing a series of higher lows, which is
somewhat promising," said Roelof-Jan Van den Akker, senior
technical analyst at ING.
"We're now trying to break through the 50-day moving average
line ... and I expect this will happen in the next few days,
followed by a break above the recent peak at 6,706 for another
rally towards strong overhead horizontal resistance at 6,840."
Housebuilders were buoyed by a bullish note by Deutsche
Bank, which said the sector's sensitivity to interest rates has
Barratt Developments was among top risers with a
3.9 percent rise, while among midcaps Taylor Wimpey added
3.7 percent and Bovis Homes climbed 1.8 percent, as
Deutsche Bank named the trio its top picks.
The Thomson Reuters UK Homebuilding index
had fallen 13 percent from its February peak, compared with a 4
percent fall for the FTSE, as investors started betting the Bank
of England would bring forward an interest rate hike, making
mortgages more expensive.
The sector index had doubled in value during the past three
years, underpinned by tight supply and British initiatives to
spur the job-intensive sector, such as the 'Help-to-Buy'
Asia-focused bank Standard Chartered, up 2.8
percent, was also among top gainers, benefitting from an upbeat
tone in Asian markets and comments by Bank of America Merrill
Lynch and Investec highlighting the stock's cheap valuation.
Standard Chartered's shares, which hit a near two-year low
last month, trade at a 7 percent discount to the British banking
sector, the steepest since 2010, Datastream data showed.
The stock has rebounded 13 percent in the past month but is
still down nearly 30 percent from its 2013 peak, having been
pummelled by concerns about a slowdown in emerging economies.
"The message from the management team was overall
reassuring," BofA ML sales traders wrote in a note to clients
after meeting Stan Chart's outgoing finance director Richard
"There is significant room for the stock to run."
Fresh tensions over Ukraine may cap broader market gains for
now, however, after the United States accused Russian agents on
Tuesday of stirring separatist unrest in eastern Ukraine.
"... It feels like we have found a bottom for now, although
events in Ukraine might keep investors wary of dipping their
toes back in," Sanlam Securities head of trading Mark Ward said.
Some analysts reckoned on a period of consolidation for the
FTSE 100, at least until the new reporting season gets fully
under way. Aluminium group Alcoa kicked off proceedings
in the United States last night, reporting earnings ahead of
expectations even though revenues missed forecasts.
"It's very possible we'll be treading water now until such
time as the Q1 reporting season really kicks in," said Richard
Hunter, head of equities at Hargreaves Lansdown.
"We've been waiting for some kind of catalyst to drive the
market forward again, and hopefully it's something that we might
see from the Q1 reporting season."
(Additional reporting by Tricia Wright; Editing by Susan Fenton
and Toby Chopra)