Stock market rallies eclipse eurozone political uncertainty
BRITISH equities rose to five-year highs on Monday, with a rally on Wall Street eclipsing concerns about political uncertainty in the eurozone and helping the FTSE 100 close above the key 6,500 points mark.
The UK blue chip index closed up 20.05 points or 0.3pc at 6,503.63, extending gains after the U.S. S&P 500 hit its strongest intraday levels since late 2007, continuing to draw comfort from Friday's forecast-beating US jobs data.
"We are just grinding higher on the back of stronger U.S.data that we keep seeing," said Adam Sea grave, equity trader at
"For the right shares, people are still very happy to take stock on at these levels, but at some point we will probably have to pause for breath."
Both the close and the intraday peak of 6,505.30 were the FTSE highest for more than five years, but technical charts showed scope for further gains. The index has powered through a string of resistance levels as it rallied some 15pc in four months.
"We remain positive with a target of 6,535 and an invalidation level at 6,412 points," analysts at chart specialists Day-By-Day said in a note.
Underscoring the market's upward momentum, any dips - including the pause seen in the first half of Monday's trading session - have prompted strong buying interest.
"Much of the dip buying we have seen has been led by long-term investors. They still understand in the search for yield the equity market offers more upside than the negative real rate of return from the fixed-income market," said Fiat Latin, director of trading at Guardian Stockbrokers.
Given the strong focus on yield, shares in Antofagasta were one of the top gainers, up 2.4pc after analysts at Societe Generale said the miner could unveil a special dividend when it reports results on Tuesday. They upgraded the stock to 'hold'.
Dividends are coming out as an increasingly popular investment theme, offering an alternative to ultra-low government bond yields. In UK, the chances of higher payouts have been increased by weakness in sterling, which increases the impact of exporters' foreign currency earnings.
Banks were one of the few UK segments to sit out the broader market gains on Monday, hit by euro zone jitters.
The sector, the most directly exposed to swings in the euro zone crisis through their sovereign debt holdings, fell 0.4pc after Fitch cut Italy's credit rating, putting problems in the region back into the investor spotlight.