Little gain for FTSE

Britain's top share index made little headway today as a warning by ratings agency S&P about potential trouble in the euro zone weighed on banks in particular and took the steam out of the index's recent sharp rally.

London's blue chip index nosed up 6.08 points, or 0.1 per cent, to 5,995.84.

The index posted its best weekly percentage gain in almost a year, up 5.1 per cent last week, after Greece approved an austerity plan that will pave the way to a tranche of new bailout money.

The euro debt crisis is far from over though and ratings agency S&P offered a stark reminder to investors of the challenges the region still faces.

S&P warned Greece would likely be in default if it followed a debt rollover plan pushed by French banks, deepening the pain of a bailout that one European official said would cost Athens sovereignty and jobs.

The uncertainty prevented the UK benchmark FTSE 100 index from posting more significant gains with investors happy to lock in profits in the banks , which have led the recent rally.

Integrated oils and miners, sectors consolidated recent gains too as some risk appetite waned.

"There's an element of profit taking that has crept in and S&P comments will be mulled over by investors and taken into consideration," said Keith Bowman, equity analyst at Hargreaves Lansdown.

Heavyweight Vodafone, up 0.4 per cent, lent upside momentum after announcing a long-awaited deal to buy out its partner Essar from their Indian mobile joint venture for $5.46 billion, ending a highly fractious relationship.

Credit Suisse said it saw scope for a recovery in the performance of the European telecoms sector over the the second quarter results period, highlighting its UK top picks as BT Group, Vodafone and Inmarsat.

Software firm Autonomy added 1.2 per cent after Espirito Santo Investment Bank issued a bullish note on the firm saying it still saw scope for upside to the synergy targets from the acquisition of Iron Mountain's digital assets although investors remained sceptical following its profit warning.

Temporary power provider Aggreko was up 1 per cent after Citigroup raised its earnings forecasts on the company.

With the FTSE's charge stalling around 6,000, analysts said investors' attention will soon turn towards the second-quarter earnings season in the United States.

"The general view of the fund managers that we have been talking to is that equity valuations hit their lows in June," said Lothar Mentel, chief investment officer at Octopus Investments.

"A positive earnings reporting season, and a third quarter rebound in global economic activity should therefore see equities make further gains."

Short-term however, volumes were expected to be light today as the US equity market is closed for Independence Day.

The main focus this week is expected to be the latest Bank of England interest rate decision, due on Thursday, although no change is expected once again to British monetary policy.

Reuters