LONDON (Reuters) - Strength in heavyweight banks and mining stocks helped support Britain’s top shares on Monday as the leading index consolidated above levels where investors have previously sought to sell.
At 1145 GMT, the FTSE 100 .FTSE index was up 5.35 points, or 0.1 percent at 6,126.93, close to four-and-a-half year highs, having gained over 2 percent since the start of 2013.
“The implication of this price action is that the resistance band which formed in 2010/11 (when the FTSE topped out at 6,105) is not only being tested but appears to be giving way,” Bill McNamara, technical analyst at Charles Stanley said.
“However, before we can assert with confidence that a break to the upside is underway we are going to need to see a decisive move through 6,150 or so ... A drop back through 6,050 or so would look fairly bearish,” McNamara added.
Banks .FTNMX8350 were among the top performers, led by Lloyds Banking Group (LLOY.L) up 2.4 percent, with the sector under the earnings spotlight this week as peers JPMorgan Chase (JPM.N) and Goldman Sachs (GS.N) will report fourth quarter results.
Upbeat comments from a top Federal Reserve official also helped support the market, with U.S. stocks futures indicating modest gains from Wall Street too on Monday.
Chicago Fed president Charles Evans said the U.S. central bank’s decision last year to tie monetary policy to specific economic conditions should help boost the recovery without letting inflation take hold.
Given Evans’ comments, investors will look to a speech on Monday by Fed Chairman Ben Bernanke for further clues to the longer term bias of U.S. monetary policy, especially after last week’s surprise disclosure of a three-way split on the Federal Open Market Committee over the duration of asset purchases.
“It would be a surprise if Bernanke were to defer to the more hawkish elements on the committee ... However, the Fed Chairman has gone on the record as arguing that monetary policy could well be reaching the limits of its effectiveness, in the absence of political action,” Nick Dale-Lace, Senior Sales Trader at CMC Markets UK said.
Gains by miners .FTNMX1770 provided the main prop for the market, supported by a firmer copper price after recent upbeat trade data from top metals consumer China, with the focus also on China’s economic output data due at the end of the week.
Eurasian Natural Resources ENRC.L was the top blue chip gainer, up 2.8 percent, with the Kazakhstan-focused miner also helped by an upgrade from Credit Suisse to “outperform” from “neutral”.
The top FTSE 100 faller was Associated British Foods (ABF.L), down 1.4 percent as Nomura downgraded its stance for the sugar producer to clothing retail group to “neutral” from “overweight” in a European consumer goods review.
AB Foods was one of the biggest traded blue chips at around half its 90-day daily average approaching midday, with overall FTSE 100 volume at less than a third of its daily average.
Accounting software firm Sage Group (SGE.L) fell 1.2 percent, with traders citing a rating to “underweight” from “equal-weight” by Barclays, which cited concerns over increasing competition and the stock’s valuation.
Reporting by Jon Hopkins; Editing by Ruth Pitchford