September 21, 2010 / 8:17 AM / 9 years ago

Britain's FTSE pushes higher; banks, oils gain

* FTSE 100 index up 0.3 percent

* Banks up, helped by positive broker comment

* Oil services boosted by Wellstream bid approaches

By Jon Hopkins

LONDON, Sept 21 (Reuters) - Britain’s top shares pushed higher in early deals on Tuesday, extending the strong gains seen in the previous session thanks to gains by banks and energy issues, though moves were muted overall as investors awaited the outcome of a U.S. Federal Reserve policy-setting meeting.

At 0759 GMT, the FTSE 100 .FTSE index was 16.57 points, or 0.3 percent higher at 5,619.11, having jumped 1.7 percent on Monday to close at its highest level since late April.

“We haven’t had a great deal of follow-through this morning from Wall Street’s strength ... it’s all really very much on hold ahead of the FOMC, but for all that we have managed to push higher,” said David Morrision, market strategist at GFT Global.

“We are breaking through long term areas of resistance but we are not doing it convincingly and not doing it on good volumes ... we are going up on fumes rather than any decent strong reason,” Morrison added.

Banks provided the biggest support for the FTSE 100 index, extending a rally seen late on Monday thanks to some positive broker comment, with Goldman Sachs lifting targets for the UK sector in a pan-European review.

Royal Bank of Scotland (RBS.L), Barclays (BARC.L), and Lloyds Banking Group (LLOY.L) gained 0.9 to 1.0 percent, with Deutsche Bank also hiking its Lloyds target a day after the bank confirmed that its chief executive Eric Daniels would step down.

Asian-oriented Standard Chartered, however, was the best performing bank, up 1.1 percent as Nomura repeated its “buy” rating following a sell-side meeting on Consumer banking.

Oil explorer Cairn Energy (CNE.L) was the top performer blue chip performer, up 2.9 percent, after it said a well being drilled in Greenland found evidence of oil proving a working hydrocarbon system in Baffin Bay, raising hopes that the region could become a new oil producing basin. [ID:nLDE68K06Q]

Integrated oils also saw good demand, with BP (BP.L) up 1.0 percent, extending gains it made on Monday after news it had permanently sealed its ruptured Gulf of Mexico well.

WELLSTEAM WANTED

Oil services stocks saw strong demand as mid cap Wellstream WSML.L jumped 29 percent higher after it said it had received a number of bid approaches, though it was unsure if an acceptable offer would be forthcoming. [ID:nLDE68K08S]

In reaction, Evolution upped its rating for Wellstream to “buy” from “neutral”.

Mid cap peers Lamprell (LAM.L), John Wood Group (WG.L), and Hunting (HTG.L) took on 2.0 to 4.4 percent, while blue chips Amec AMEC.L and Petrofac (PFC.L) added 0.7 and 0.6 percent.

But miners were a drag on blue chip sentiment as base metal prices retreated, with Eurasian Natural Resources among the worst off, down 0.8 percent.

Randgold Resources RRS.L was also a top FTSE 100 faller, down 0.9 percent as gold prices just held steady, after surging to a record for the third consecutive session, as investors awaited the outcome of a meeting of the Federal Reserve.

The Fed may discuss whether a shaky U.S. economy needs a fresh infusion of cash, and although an easing is thought to be unlikely, there is an expectation that it will signal its readiness to act if necessary. [ID:nN14175842]

Domestically, investors will watch public sector borrowing data for August, released at 0830 GMT, for more clues on the state of Britain’s public finances and prospects for a steady recovery.

Technical analysts saw support for the FTSE 100 index near current levels.

“Despite a near-term pullback through the support of an intraday Rising Wedge, expect the bulls to support the FTSE between 5,589 and 5,607,” Raghee Horner, Autochartist chief market analyst said in a note. (Editing by Hans Peters)

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