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UPDATE 1-Britain's FTSE buoyed by signs of economic strength
August 23, 2013 / 3:57 PM / 4 years ago

UPDATE 1-Britain's FTSE buoyed by signs of economic strength

* FTSE 100 up 0.7 percent

* Signs of pick-up in global growth bolster sentiment

* Croda leads, Deutsche Bank upgrades to “buy” (Updates prices)

By Tricia Wright

LONDON, Aug 23 (Reuters) - Britain’s blue chip shares advanced on Friday, led by specialty chemical maker Croda International on a rating hike from Deutsche Bank, with investors heartened by signs that a global economic recovery is taking hold.

The FTSE 100 closed up 45.23 points, or 0.7 percent, at 6,492.10 points, building on the previous session’s 0.9 percent rise and trimming its monthly loss to 1.9 percent.

Markets have become increasingly jittery in recent weeks on the prospect that the U.S. Federal Reserve will start reeling in its stimulus programme, which has lifted global equities.

But that was offset on Friday by fresh signs of a pick-up in the pace of economic growth, with data showing the UK economy had grown more than first thought in the second quarter - coming on the heels of a batch of upbeat macroeconomic data from around the world on Thursday. Germany also confirmed solid second-quarter growth.

“The corrective pull-back that the FTSE’s had could be described as a little bit overdone especially in light of the broadly positive data that we’ve been seeing,” Alastair McCaig, strategist at IG, said.

Croda International, up 4.3 percent, was the biggest gainer by some margin, with traders citing Deutsche Bank’s upgrade of the stock to “buy” from “hold” on the view that top-line growth is set to pick up.

“Top-line growth has slowed over the past year ... We view this slowdown as cyclical rather than structural and expect sales growth to accelerate driven by a resumption of growth in Crop Care and Personal Care,” the bank said in a note, referring to two divisions of the company.

GFT Markets analyst Fawad Razaqzada, however, sounded a note of caution about the FTSE 100, unwilling to say that the index, up around 10 percent this year, is back on its long-term bullish trend until it breaks through several resistance levels - at 6,500, 6,550 and 6,640. (Editing by Hugh Lawson)

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