FTSE flat as banks fall and insurers rise

By David Brett

LONDON (BestGrowthStock) – Britain’s top shares were flat on Friday, with insurers boosted by bullish broker comment, while Standard Chartered was hit by a broker downgrade, as investors looked ahead to the monetary policy announcement in China.

By 0844 GMT, the FTSE 100 (.FTSE: ) was down 1.38 points at 5,806.58, following Thursday’s 0.2 percent gain.

Banks (.FTNMX8350: ) were the worst performing sector on London’s blue chip index, giving up some of the previous session’s gains and led lower by Standard Chartered (STAN.L: ).

Standard Chartered fell 2.2 percent after BofA Merrill Lynch downgraded the Asia focused bank to “neutral” from “buy”, calling its trading update on Thursday “disappointing relative to expectations”.

UK investors remained cautious as China’s leadership meets to review the world’s fastest-growing major economy amid speculation policy makers will tighten monetary policy this weekend, potentially in the form of a interest rate rise.

“The market has been expecting that we would see additional tightening,” Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London said.

“On the other hand China’s going to be pursuing a very active fiscal policy which is something the markets haven’t really yet been focusing on.”

China, overnight, said imports and exports were much stronger than expected in November. Investors will watch for inflation data, due out on Saturday, the most important predictor of monetary policy at this juncture in the economic cycle.

COMMODITIES WAIN

In London, mining shares (.FTNMX1770: ) and energy stocks (.FTNMX0530: ) also weighed on the index, highlighting investor uncertainty.

However, miner Anglo American (AAL.L: ) gained 1.5 percent after saying it will start building early next year one of its biggest growth projects, the Minas Rio iron ore operation in Brazil, after getting a key license from the government.

Elsewhere, Rolls-Royce (RR.L: ) fell 2 percent with traders citing a Financial Times report that the engine maker could face costs of $500 million over the next few years to deal with the consequences of an explosion in one of its Trent 900 engines, according to some aviation experts.

Insurers were a good support for the FTSE, with Prudential (PRU.L: ) up 1.8 percent after Morgan Stanley raised its rating on the firm to “overweight” from “equalweight”.

Resolution (RSL.L: ) added 0.7 percent after Morgan Stanley raised its target price for the insurance buyout specialist.

Equities continue to show resilience in the face of macroeconomic uncertainty, as investors back the ability of companies to grow profits and yields, even in austere times.

“The steadiness of the market has been surprising but I think that reflects the growing confidence and conviction in the outlook for next year,” Brewin Dolphin’s Lenhoff said.

“This is backed up by the U.S., which now has fiscal as well as monetary policy geared toward to expansion which I guess will lead to upward revisions (to estimates).”

The FTSE has risen 5 percent since its recent low on November 30, and is up 7.2 percent in 2010.

(Editing by Jon Loades-Carter)

FTSE flat as banks fall and insurers rise