Optimism over progress in Athens rescue plan helps boost Footsie

FTSE:5,714.94 (+16.13) Mid-250:11,661.78 (+29.92) Small Cap:3,254.17 (–1.04)

BRITAIN’S TOP share index edged up yesterday, as optimism on progress on the latest rescue plan for Greece sparked a bounce from three-months lows.

But strategists said the macro environment meant equities would struggle to move much higher.

The FTSE 100 rose 16.13 points, or 0.3 per cent, to close at 5,714.94, having sunk as low as 5,644.98 earlier in the session.

Volume was heavy at more than 146.7 per cent of the 90-day average.

The index fell 0.9 per cent over the week, its fourth straight week of losses, on concern about global economic growth and the euro zone crisis.

“In some respects it was a relief rally today. Nothing is resolved,” said James Barber, head of UK and European equities at Russell Investments.

The leaders of Germany and France said yesterday that they were united behind a new aid package for Greece that would include voluntary private sector participation on the basis of the so-called “Vienna Initiative”.

The euro rose sharply, and the softer dollar helped limit losses for metals and oil prices. But concerns over slower economic growth, that could weaken metals demand, weighed on market sentiment.

Gold increased 1 per cent to notch its biggest one-day gain in three weeks.

Randgold advanced 2.1 per cent. Copper miner Kazakhyms rose 1.7 per cent.

Recent weakness has created “some good entry points for cyclicals,” Mr Barber said, “but with earnings revisions coming down it’s hard to see the cyclicals performing well”.

He said UK stocks were still trading at a discount compared with other developed markets and he expected the FTSE to make moderate gains by the year end.

Equity valuations on Thomson Reuters Datastream showed the FTSE carrying a one-year forward price to earnings of about 9.8, compared with 12.1 for the SP 500 .

Glasgow-based temporary power provider Aggreko was the top blue chip performer, up 2.4 per cent as Goldman Sachs raised its target price on the firm ahead of a trading update on Monday.

Tesco helped support the index, up 1.1 per cent, though it fell over the week, having reported disappointing sales on Tuesday. – (Bloomberg)