By Sudip Kar-Gupta
LONDON (Reuters) – The benchmark share index rose on Tuesday, inching back towards its 2013 highs after upbeat earnings reports from BP and Lloyds bank and on expectations for a European Central Bank (ECB) rate cut this week.
The blue-chip FTSE 100 index was up by 0.3 percent, or 19.10 points, at 6,477.12 points, moving back in the direction of its 2013 intraday peak of 6,533.99 points reached in mid-March.
“We’re looking forward to a possible ECB rate cut later this week. That stimulus has kept everyone upbeat,” said Darren Easton, director of trading at Logic Investments.
Expectations of fresh stimulus measures and rate cuts from world central banks, such as the ECB and U.S. Federal Reserve, have boosted equity markets. The lower rates and injections of liquidity should help companies export more overseas and have also led investors to shift money out of bonds and into equities for better returns.
Easton said he had taken out “long” positions to bet on further gains for the FTSE this week.
“We wouldn’t want to bet against this market going higher in the near term.”
Solid results from leading UK companies supported sentiment.
According to Thomson Reuters Starmine data, 80 percent of companies who have reported first-quarter results in the broader FTSE 350 index, which comprises the FTSE 100 and the FTSE 250 mid-cap sector, have beaten or met expectations.
Oil major BP continued that trend on Tuesday with forecast-beating first-quarter profits, sending BP shares up 2.
Part-nationalised British bank Lloyds also posted higher first-quarter profits to send its shares up by 5.1 percent to the top of the FTSE 100′s leaderboard.
The FTSE 100 has risen by nearly 10 percent since the start of 2013 but some traders expect the market to trade sideways or fall slightly in the next couple of months as some investors sell shares in order to book profits on the rally.
“I would still sell strong rallies on the FTSE,” said Hartmann Capital trader Basil Petrides.
(Editing by Susan Fenton)