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UPDATE 1-Banks, miners nudge FTSE to 3-week closing high
April 2, 2014 / 4:10 PM / 4 years ago

UPDATE 1-Banks, miners nudge FTSE to 3-week closing high

* FTSE 100 up 0.1 pct, highest close since March 11

* Banks, miners advance, helped by U.S. data

* Pearson, Resolution slip after trading ex-dividend (Updates prices)

By Tricia Wright

LONDON, April 2 (Reuters) - Britain’s blue chip shares inched higher on Wednesday, propped up by cyclical banks and mining companies on encouraging economic news in the United States.

The FTSE 100 ended up 6.43 points, or 0.1 percent, at 6,659.04 points, its highest close since March 11, with the UK banking index up 0.7 percent, and the mining index 1.2 percent higher.

Technical analysts saw scope for the UK benchmark to move towards the top end of the range it has been stuck in since late October, between about 6,400 and 6,800.

Barclays Capital analyst Lynnden Branigan said the fact the index cleared its 100-day moving average at 6,658 could herald further strength.

“I think in terms of upside, we’re now initially looking at a Fibonacci retracement (of the down-move from late February to late March) at 6,723,” he said.

Helping to underpin the rise, U.S. companies stepped up hiring in March and factory orders rose solidly in February, in the latest signs the world’s biggest economy was regaining its footing after a brutal winter.

Miners built on gains seen on Tuesday when more downbeat economic data from China supported a view that Beijing would announce further measures to steady growth, and investors were optimistic BHP Billiton would shed unwanted assets.

Major mining firms have been getting rid of assets in the past few years as they pledge better returns for shareholders.

“Any sort of cyclical optimism ... and I think the market’s going to look very similar to what we’re seeing today with basic resources,” Ian Richards, global head of equities strategy at Exane BNP Paribas, said.

“We still think that that’s probably one of the biggest valuation plays in the market ... I think it’s not going to take too much to push investors into that area given the free cash flow generation story.”

The STOXX Europe 600 Basic Resources index trades at a 12-month forward price/earnings ratio of 11.9 times, against a late February peak of 12.9 times, Thomson Reuters Datastream shows.

Limiting the index’s gains were stocks trading ex-dividend - including Resolution and Pearson - which knocked 3.78 points off the index. (Additional reporting by Atul Prakash; Editing by Susan Fenton)

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