Earnings help FTSE to new 5.5-year closing high

By Tricia Wright

LONDON (Reuters) - Solid corporate earnings helped push FTSE top share index to a fresh 5.5-year closing high on Wednesday, led by low-cost airline easyJet after a robust update.

The UK benchmark ended up 7.49 points, or 0.1 percent, at 6,693.55, its highest close since October 2007.

Easyjet and exchange operator London Stock Exchange were bolstered by estimate-beating updates, notching up respective gains of 8.3 percent and 5.3 percent.

Traders said the positive earnings news was very much the focus on a day otherwise marked by gloomy economic data from the euro zone, which contracted in the first quarter.

Technical analysts remained bullish on the index, which has just recorded its tenth consecutive day of gains.

"You can't fight the trend," said Lynnden Branigan, technical analyst at Barclays Capital, who has 6,754, the 2007 peak, as an initial target.

The FTSE has risen 7.5 percent in the past month as pledges of continued monetary stimulus from global central banks, and especially the U.S. Federal Reserve and European Central Bank, underpinned investor appetite for risk assets.

Neil Veitch, investment manager at SVM Asset Management, reckoned the market would grind higher into the year-end, but has cut exposure to defensives which have led the rally in 2013, perceiving them to be fully valued.

He has been switching into more cyclical stocks - most recently International Airlines Group.

While technical momentum indicators such as the relative strength index show the FTSE 100 is in 'overbought' territory, fund managers see scope for more gains as investors continue to plump for equities over bonds due to better returns.

"That trend is not showing any signs of abating," said Miton fund manager George Godber, referring to the greater lure of equities.

Godber, manager of the CF Miton UK Value Opportunities Fund, stressed the importance of being selective in stock picking, with ITV and Sainsbury among stocks he owns.

The FTSE 100 trades on a 12-month forward price/earnings ratio of 12.31 times, according to Thomson Reuters data.

"The markets generally are actually looking quite good value still," said Leigh Himsworth, head of UK equities at City Financial and manager of the CF Eden UK Select Opportunities Fund.

A fall in the value of stocks trading without the attraction of their latest dividend, including oil major Royal Dutch Shell exerted pressure on the index to the tune of 9.59 points.

(Editing by Hugh Lawson)

Source: http://news.yahoo.com/mixed-earnings-leave-ftse-flat-071708176.html

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