November 15, 2013 / 12:46 PM / 4 years ago

Yellen's defence of stimulus lifts Britain's FTSE

* FTSE 100 up 0.4 percent
    * Fed chairman-designate defends bond-buying programme
    * Centrica weakens, analysts cut target prices

    By Tricia Wright
    LONDON, Nov 15 (Reuters) - Britain's top shares rose on
Friday, bolstered by the promise of continued U.S. monetary
stimulus, with energy stocks and miners posting the biggest
gains.
    The mood in the markets was lifted after the Federal
Reserve's chairman-designate Janet Yellen defended the bank's
quantitative easing programme on Thursday, dispelling concerns
about an early reduction of the asset purchases.
    With risk appetite boosted by the comments, cyclical stocks
such as miners and oils found favour,
helping drive the FTSE 100 up 26.74 points, or 0.4
percent, to 6,692.87 points by 1216 GMT.
    The QE programme has helped the UK benchmark index, which
has risen nearly 20 percent as investors have moved out of safe
bonds and into higher yielding assets, such as stocks.
    This has left the index trading on a 12-month forward
price/earnings ratio of 12.7 times, above its 10-year average of
12, Thomson Reuters Datastream shows. Some traders saw scope for
a sell-off.
    "As you would be hard pushed to find many bears out there
due to the 'Yellen effect', the contrarian in me feels it's time
to bet against the trend with equities looking overbought," Mike
McCudden, head of derivatives at Interactive Investor, said.
    But Charles Stanley analyst Bill McNamara said 6,600, around
the index's 50-day moving average and which represents a 38.2
percent retracement of the recent rally, looked like a key
support level.
    Utility group Centrica, off 2.4 percent, pinned back
the FTSE, falling for a second day as a string of analysts cut
their target prices for the stock after a profit warning on
Thursday. 
    "On one hand, profits are being eroded by competitive
pressures in energy retail and power generation; on the other
the ...rhetoric in the media is hostile due to perceived
profiteering," JPMorgan said in a note.
    "Until the public and political climate becomes more
constructive, we see limited share price upside for either
Centrica or (peer) SSE."
    Shares in SSE slipped 0.6 percent.
0 : 0
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