By Jonathan Cable
LONDON, Sept 30 (Reuters) - Britain's FTSE 100 index of leading shares will trade around current 12-month highs at the end of 2009 and will see only a very modest rise by mid-2010, a Reuters poll showed on Wednesday.
The quarterly poll of around 20 strategists, taken over the past week, gave median forecasts for the FTSE 100 to be at 5,150 by the end of this year, little changed from a close of 5,159.72 on Tuesday but marking a 16 percent rise since the start of the year.
The index of firms from banks to miners to technology firms is seen lifting gently to 5,250 by the end of June.
"A correction is overdue but this market doesn't look as if it wants to go down. Looking forward to next year we're not going to be raging bulls," said Allan Collins, head of investment strategy at brokers Redmayne Bentley.
The last poll, taken in June, forecast the FTSE ending this year at 4,600 and forecasts in the most recent poll ranged widely from 4,100 to 5,500 but none saw a return to March lows.
The FTSE sank 31 percent last year as global markets plunged in the face of a financial crisis that sent major economies into recession. The slump came after an 11 percent rise in 2006 and a more modest 3.8 percent rise in 2007.
The index hit a six-year low of around 3,460 in March but has since rebounded around 50 percent as earnings have surprised to the upside and the economy crawls out of recession.
"Profits are going up. All the sectors are seeing profits rise, pretty much across the board. Earnings momentum is starting to improve as you would expect as we enter a recovery period," said Darren Winder at Cazenove. The UK's banking sector, the backbone of the British economy, has taken a battering, with massive writedowns and a drying up in lucrative merger activity, but has outperformed the FTSE in recent months as banks say the worst is over.
British banks HSBC and Barclays, who unlike rivals avoided taking taxpayer rescue funds, said in August they could be through the worst as they reported buoyant investment bank earnings.
Their shares have more than doubled and tripled respectively from March lows.
British housebuilders have also struggled amid a housing slump, with shares in firms such as Taylor Wimpey, Bovis Homes and Persimmon all sliding as profits crashed.
But an upturn for them may also be ahead, as housebuilders and a Reuters poll of analysts earlier this month both say UK house prices have finally bottomed, although a return to growth will be slow and steady.
Britain's economy entered recession at the end of last year for the first time since the early 1990s but economists see it growing again in the current quarter as unprecedented action by the Bank of England pays off.
The central bank has slashed 450 basis points from interest rates over the past year, putting them at a record low of just 0.5 percent, and the bank has used quantitative easing, effectively printing money, in an effort to boost the struggling economy.
"We are only now just beginning to see an improvement in credit markets and ultimately that is what will strengthen the recovery in 2010, so the full effects have yet to be felt," Winder said, who sees the FTSE at 5,500 by next June.
Analysts say low interest rates will push investors searching for higher profits into stocks as risk appetite returns.
(For poll data click on) (For other stories from the global stock markets poll click on ) (Polling by Bangalore Polling Unit; Editing by Jon Loades-Carter)