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FTSE preview: Shares firm as Egypt fears lift

By Reuters
Updated: 02:56 EDT, 14 February 2011

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FTSE 100 is expected to rise this morning, extending gains from Friday after news of Egyptian President Hosni Mubarak's resignation, and with economic data from China seen as supportive.

Dealers monitor their screens on the trading floor of IG Index in London

Monday: Eyes will be on economy data later thhis week.

The UK blue-chip index looks set to climb 11-13 points, or 0.2%, according to financial bookmakers, after it closed 42.89 points, or 0.7%, higher at 6,062.90 on Friday.

Technical analysis for the FTSE 100 was cautiously optimistic.

'Based on the short-term range of 6,091.33 to 5,973.44, the close over the retracement zone at 6,032.39 to 6,046.30 puts the index in a strong position to breakout to the upside,' James Hyerczyk, an analyst at Autochartist, said.

'Renewed momentum on Monday will be needed to drive this market higher; however, a break back under the retracement zone will be a strong indication that the rally was driven by short-covering rather than fresh buying.'

Traders said that Chinese trade data looks set to brighten the mood. China's trade surplus fell more than expected in January after imports surged, supporting the government's case that it is doing enough to spur domestic demand without speeding up currency appreciation.

Financial markets could, however, remain pressured in the wake of Mubarak's departure, amid concerns over potential spillover effects to the broader Middle East.

Egypt's new military rulers dissolved parliament and suspended the constitution on Sunday, but said they would govern only until elections to replace ousted President Hosni Mubarak, possibly in six months.

'As the Egyptian crisis nears an end, the strong sentiment could be capped as traders will be cautious of the wider implications for further contagion in the Middle East,' Jonathan Sudaria, a dealer at Capital Spreads, said.

In terms of economic data, with nothing important on either the domestic or US calendars on Monday, the market was looking to key releases later in the week for further direction.

These include Tuesday's UK January inflation data, ahead of the Bank of England's quarterly inflation report, to be published on Wednesday.

Monday is quiet on the corporate earnings front too, with no UK blue chips reporting. Barclays and BHP Billiton are among big names set to post numbers later in the week.

InterContinental Hotels shares, up 30% since November, should rise further as more middle-class travelers hit the road, driving up occupancy and room charges, Barron's reported.

Britain's banks need radical reform to end a culture of paying 'offensively' large bonuses, Business Secretary Vince Cable, a long-time critic of the banking sector, said.

Also, Barclays will risk reigniting public anger over bonuses on Monday by revealing that it is paying its bankers an increased proportion of its investment bank's revenues, the Times said.

As emerging markets grow, the appetite for energy is likely to exceed the production of oil by a huge margin, a report by Royal Dutch Shell has found, the Times reported.

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A federal panel has denied a request from Royal Dutch Shell to reinstate disputed air-quality permits needed to drill offshore in Arctic waters, making it clear that the company and regulators must start over to draft new and stricter permits.

The London Stock Exchange's biggest shareholder could reduce its stake to prevent the blocking of its proposed merger with TMX Group, the Times said.

General Electric Co is to buy the well support division of British energy services firm John Wood Group for about $2.8bn, the companies said, the latest move by the largest US conglomerate to boost its presence in oil services.

National Express is understood to be facing pressure to put itself up for sale from shareholder Elliott Management, a US hedge fund, which could lead to a tie-up with peer Stagecoach, The Guardian said.

The chief executive of Amlin, Charles Philipps, has warned that the Lloyd's of London insurer could relocate overseas if regulatory requirements to be introduced in 2013 are too aggressive, the Daily Telegraph said.

Barratt Deverlopment is considering a move into London's lucrative rental market, as it looks to hedge against the impact of restricted mortgage availability, the Financial Times said on Monday.

There will be results today from Fidessa and SVG Capital, while F&C Commercial Property Trust and Hirco hold AGMs.

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