MARKET COMMENT: FTSE 100 Records Highest Close For 14 Years

LONDON (Alliance News) - The FTSE 100 has recorded its highest closing price since 1999. Although opening lower, some positive European data and a strong start to equities trading in the US gave London's leading index a boost, sending the FTSE 100 higher for the seventh consecutive day, recording the highest closing price since December 30 1999, when the index reached 6,950.60.

The FTSE 100 has closed up 0.4% at 6,865.86 and the FTSE 250 has closed up 0.5% at 16,539.29. The AIM All-Share has outperformed its main market peers, closing up 1.2% at 892.50.

Major European markets also closed higher, with the DAX up 0.5% at 9,708.94 and the CAC 40 up 0.9% at 4,419.13.

"The UK FTSE 100 and German DAX are both bumping up against their multi-year highs and will need a continuation of recent data beats to break this strong resistance of 6,875 and 9,794 respectively," said CMC Markets chief market analyst Michael Hewson.

European equities had opened with a negative bias following on from a lower close across Asian markets after a weekend report that Chinese banks are becoming more strict on lending to property developers. "The tightening, which is likely to remain until end of March, is viewed as a negative in the short-term as the authorities try increase the quality of credit on offer to help overall growth," said Spreadex Financial Sales Trader Lee Mumford.

In the absence of any UK data Monday, positivity returned throughout the day after some stronger-than-expected economic readings in Europe and a strong open on Wall Street.

After the close of European markets, US indices are continuing to push higher, with the S&P 500 having reversed all of the January sell-off to trade at an all time inter-day high, above 1,855 points. The S&P 500, the DJIA, and the Nasdaq Composite are currently all up about 1.0%.

Consumer prices in the eurozone rose by a steady pace of 0.8% year-on-year in January, showing an unchanged growth rate from December, according to official CPI data. The reading should provide some relief for policy makers at the European Central Bank, as economists had expected price growth to slow to 0.7%. On a month-on-month basis, prices fell by 1.1% in January, in line with expectations, having risen by 0.3% in December.

German IFO survey, released earlier in the morning, also provided a positive surprise. The closely watched indicator of current business climate conditions recorded 111.3 in February, up from 110.6 in December. Economists had expected the reading to remain unchanged.

Within UK equities, the banks weighed on London's leading index Monday, with HSBC leading the sector and index lower after reporting full-year results that disappointed compared to market expectations. Despite reporting a 9.3% increase in annual pretax profits HSBC closed down 4.5% as analysts had expected more. Almost every aspect of the banks earnings missed expectations and it would be surprising not to see downgrades to earnings expectations for 2014 and beyond, said Shore Capital analyst Gary Greenwood.

Barclays slipped lower before closing up 0.4% after it was reported that the long standing Chairman of its Investment Bank is set to retire. The Wall Street Journal reported the story, having received a leaked internal memo from the bank.

Another financial stock, RSA Insurance Group, was a big faller, closing down 3.7% after saying it is considering a number of measures, including a rights issue, in order to raise the capital it needs to boost its balance sheet. In a statement issued on its website, RSA - which is widely expected to cancel its dividend as it struggles with the aftermath of a discovery of a GBP200 million hole in its balance sheet last year - said no final decision has been made on how to raise the capital it requires.

Mining stocks were also amongst the heaviest fallers, with Anglo American down 1.8%, Rio Tinto down 1.8% and Antofagasta down 2.4%. Following the reports about Chinese banks cutting back on lending to property developers, "mining stocks have taken a tumble on fears that Chinese authorities will start to tighten lending criteria," said CMC's Hewson.

Bunzl PLC was the biggest blue chip gainer Monday, closing up 6.8% after reporting full-year results that beat analyst expectations on almost all metrics. The group also announced two new acquisitions Monday, in Germany and the Czech Republic, which will bring a further GBP19 million in annual revenues, according to analysts.

Vodafone shares closed up 4.4%, mostly on a technical move, after carrying out its 6-for-11 share consolidation. The consolidation comes after the US's Verizon Communications announced on Friday that it had completed its acquisition of Vodafone's 45% interest in Verizon Wireless in a deal valued at around USD130 billion.

The combination effect of Vodafone's rise and HSBC's fall saw the mobile giant overtake Europe's biggest bank as the largest company by market capitalisation on the London market.

General retailers had a positive day, with Dixons Retail closing up 3.7% and Carphone Warehouse closing up 2.1% following the news that the two companies are in discussions over a possible merger.

On Tuesday, preliminary full-year results are due from Ladbrokes, Persimmon, GKN and St James's Place PLC. Ashmore Group are due to report interims, along with Genus and Dechra Pharmaceuticals.

In the economic calendar, Europe will be the early focus, with German fourth-quarter GDP data is due out at 0700 GMT, followed by a business confidence survey from France due at 0745 GMT and a consumer confidence survey from Italy at 0900 GMT.

From the UK, the latest BBA mortgage approvals data is due at 0930 GMT, followed by the inflation report hearings at 1100 GMT.

In the afternoon, the US consumer confidence survey for February is the main focus.

By Jon Darby; jondarby@alliancenews.com; @jondarby100

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