Defensives rise, push UK’s FTSE higher

By Simon Falush

LONDON (BestGrowthStock) – Britain’s top share index gained early on Thursday, as strength from defensive tobacco and pharmaceuticals stocks offset a dip from BP which was hit by a lawsuit from the United States over the gulf spill.

By 0849 GMT the FTSE 100 was 0.3 percent higher at 5,900.16 after it ended down 9.03 points, or 0.2 percent on Wednesday, snapping a four-session winning streak. It finished at its highest close for 30 months on Tuesday.

Futures and options expiries kept trade skittish, quadruple-witching expiries of index and individual company futures and options will occur around 1000 GMT in London on Thursday.

BP took most points off the index, falling 2.7 percent after The Obama administration on Wednesday launched a legal battle against BP Plc and its partners by suing them for the worst offshore oil spill in U.S. history, which could cost the companies billions of dollars.

However overall trade was light, with investors reluctant to take big new positions as activity winds down in the run-up to the festive period.

“Volumes are low, and there are signs that investors are exhausted after strong gains, particularly from financials,” said Colin McLean, managing director at Scottish Value Management in Edinburgh.

“But there’s no big sell-off and people have got positions in place for the year-end.”

CIGARETTES, BEER, DRUGS

Investors rotated into stocks perceived as better positioned to weather a harsh economic climate, with drugmaker AstraZeneca up 0.6 percent, brewer SABMiller up 1.2 percent and British American Tobbacco gaining 0.8 percent.

Business support services companies also lent support to the index after Serco said its guidance for 2010 remained on track prompting Investec to repeat its “buy” rating on the stock.

Peer Capita gained 1.8 percent as sentiment on the sector was bolstered.

British retail sales data at 0930 GMT will be watched, with growth of 0.4 percent expected in November, after a 0.5 percent rise in October, giving a year-on-year increase of 0.7 percent, after a 0.1 percent fall in the previous month.

Across the Atlantic, the latest U.S. weekly jobless claims numbers will be released at 1330 GMT together with November housing starts, while December’s Philly Fed index will be released at 1500 GMT.

European Union leaders meet on Thursday to try to agree the next steps in tackling a year-long debt crisis that has consumed Greece and Ireland and threatens to spread to Portugal and Spain.

(Editing by Mike Nesbit)

Defensives rise, push UK’s FTSE higher