November 12, 2012 / 12:45 PM / 5 years ago

UK shares gain in thin volumes, await euro zone progress

* FTSE 100 up 0.3 percent

* Greece passes budget but debt crisis rumbles on

* Investors hedge uncertainty with defensives

By Alistair Smout

LONDON, Nov 12 (Reuters) - Britain’s FTSE 100 edged higher on Monday in thin volumes after the passage of a crucial Greek budget vote on Sunday provided temporary relief but no long-term solution to its debt crisis.

By 1141 GMT, the FTSE 100 was up 17.47 points, or 0.3 percent, at 5,787.15, opening the week with gains after losing 1.7 percent last week.

“While there hasn’t been much particularly good news in terms of the euro zone, the market doesn’t think there’s been any active bad news. In Greece the can is just going to be kicked down the road,” Mike Ingram, market analyst at BGC Partners, said.

The Greek parliament passed an austerity budget for 2013 late on Sunday, but the EU said it was not ready to authorise a new loan tranche on Monday, maintaining a position first staked out last week.

However, Athens was set to get two more years to achieve a primary budget surplus.

Volumes were low, at 26 percent of their already weak 90-day daily average, and were set to remain subdued with Veterans’ Day expected to affect trading in the United States. The weak volumes also reflected the unwillingness of investors to take up fresh positions in equities amid weak earnings and global macroeconomic uncertainty.

“If people were confident about where the market was going, they would be voting with their feet, they would be putting cash to work in the market, and they’re just not doing that,” Ingram said.

“People are just very cautious about where the euro zone is going to take UK markets, I think that’s keeping a lot of people out on the sidelines because they don’t feel they can actively trade this market.”

The index hit a two-month low on Friday, probing the 200-day moving average level around 5,730, but after recovering that session it traded in a tight 25 point range on Monday.

Banks led gains, adding 7.7 points to the index with Lloyds adding 3.5 percent after three consecutive sessions of losses.

On the whole, however, it was “defensive” stocks - companies that tend to outperform in times of economic uncertainty - that led the index higher.

British American Tobacco rose 1 percent, enough to lead the index in points added to the index. Heavyweight telecoms firm Vodafone, also liked for its dividend attractions, added 0.3 percent.

An attractive dividend also boosted car insurance firm Admiral, which gained 3.8 percent, continuing a resurgence following a double upgrade by BofA/Merrill Lynch on Friday who cited the firm’s dividend yield of over 9 percent.

Among fallers, defence firm BAE Systems fell 1 percent as peer Cobham said it expected its revenues to fall due to increasing pressures on the United States’ defence budget. (Editing by Catherine Evans)

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