FTSE 100 preview: Festive rally to end?

By Reuters
Updated: 03:06 EDT, 30 December 2009

The FTSE 100 is expected to finally fall after reaching levels on Tuesday not seen since before the collapse of Lehman Brothers in mid-September 2008.

Retreat: Shares may finally fall today.

The UK blue-chip index ended 35.20 points, or 0.7%, higher on Tuesday at 5,437.61, a 15-month closing peak and a fifth straight session of gains as the year-end rally progresses.

The UK benchmark index has rallied about 57% since hitting a six-year trough in March and is up around 23% for the year, on track for its biggest yearly gain since 1997.

US shares inched lower in a low-volume session on Tuesday, breaking a six-day string of gains as investors found little reason to push stocks higher as the year-end approaches, and Asian markets followed suit.

British Prime Minister Gordon Brown said on Wednesday his priority for 2010, an election year, is to secure economic recovery while cutting Britain's gaping budget deficit in a "sensible and fair" way.

In excerpts from his New Year message, released by his office, Brown said his strategy was to "go for growth" in the economy while reducing the government deficit at a responsible pace.

Investors will not have much else fresh for direction on the last full-trading session of 2009, with little corporate news and no important UK economic indicators scheduled for release on Wednesday.

Across the Atlantic, December Chicago PMI data will be of interest, with a reading of 55.0 expected, down from 56.1 in November.

Ahead of that, investors will also have an eye on the latest U.S. mortgage and refinancing indexes.

Ex-dividend factors will clip 0.22 points off the FTSE 100 index on Wednesday, with Alliance Trust and Experian Group both losing their payout attractions.

Rio Tinto mined more than 50m tonnes of iron ore, or a quarter of its total output this year, from a single mine in Australia for the first time as demand for the raw material recovered.

The testing equipment group Intertek is looking to acquire not-for-profit enterprises that could include parts of the British Standards Institution, with its chief executive Wolfhart Hauser questioning the need for such organisations to be run by charities, the state or other foundations, the Financial Times said.

AB Foods-owned Primark is planning to occupy a massive store in the flagship shopping centre of the 2012 Olympics in east London, The Independent said.

Daniel Stewart Securities said after the close on Tuesday that Middle East investment bank Prime Group will no longer take an equity stake in it as originally planned.

Hightex, the Aim-quoted roofing group, has collected orders for the next couple of years worth more than £40.5m, with the firm's recovery having started in August when it announced it would supply the roof for a new national stadium in Warsaw, the Financial Times said.

According to Style & Wood's chief executive, Ivan McKeever, over the next six to 12 months retailers will continue to constrain expenditure on sprucing up their stores, the Financial Times said.

There will be updates today from Accident Exchange Group and Redstone.