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FTSE flat; Kingfisher gains, miners fall

Published 09/16/2010, 04:24 AM
Updated 09/16/2010, 04:28 AM
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* FTSE 100 flat, market rangebound

* Retailers boosted after Kingfisher results

* Energy firms stronger, BT, Rolls Royce slip

By Simon Falush

LONDON, Sept 16 (Reuters) - Forecast-beating results from retailer Kingfisher and strength from energy firms offset weaker mining and telecoms stocks on Thursday, leaving Britain's top share index little changed. By 0805 GMT The FTSE 100 was down 1.26 points at 5,554.30 after it fell 0.2 percent the previous session. It is still close to a four-month high of 5,567.41 set on Tuesday.

Kingfisher was among the top performers, up 2.8 percent after it beat first-half profit forecasts, helping to dispel some of the gloom about consumer demand in the face of sharp cuts from the government expected in the October spending review.

Other retailers got a boost from the impression, supported by Wednesday's results from Next, that consumer spending was holding up, with Marks & Spencer and Home Retail both gaining around 1 percent.

"The numbers from Next yesterday and from Kingfisher today suggest that the incoming austerity measures can be ridden out," said Jeremy Batstone-Carr, head of research at Charles Stanley.

"I think consumer discretionary spending will be hard hit, and it will hurt more than people think, but for now people are taking the retailers at their word."

August's retail sales, due at 0830 GMT, are forecast to have risen 0.3 percent, below a 1.1 percent increase in July.

September's UK CBI monthly trends survey, due at 1000 GMT, will also be of interest.

Energy firms provided most of the fuel for the market's modest gain, with confidence about the demand outlook helping keep crude above $75 per barrel. BP added 1.9 percent, while Royal Dutch Shell gained 0.9 percent.

BT Group was the top faller on the index, down 2.1 percent after Morgan Stanley cut its rating to "equal-weight" from "overweight", citing concerns over the company's pension fund.

Cable & Wireless Worldwide by contrast climbed 2.8 percent as Goldman Sachs raised its recommendation on the telecoms firm to "buy" from "neutral", saying it could attract M&A interest.

Rolls Royce fell 2.1 percent after Boeing said on Wednesday that it had a serious problem with a Rolls-Royce engine on one of its 787 Dreamliner aircraft, requiring it to be replaced.

Miners were also under pressure, hindered by weaker metal prices. Xstrata fell 0.9 percent, and Rio Tinto lost 0.8 percent.

Overall trading was thin, and Batstone-Carr noted that options expiries due tomorrow were keeping traders from taking big positions.

There was little in the way of technical impetus either.

"A lack of buying momentum is keeping the move from following through higher and reflects the lack of intraday sentiment within this market, a market not bullish enough to make new highs, nor moving lower on profit-taking or weakness," said Raghee Horner Autochartist Chief Market Analyst.

Investors will eye U.S. weekly jobless claims data at 1230 GMT. Economists in a Reuters survey forecast a total of 460,000 new filings compared with 451,000 in the prior week.

The U.S. Producer Price index for August will also be released at 1230 GMT. (Editing by Will Waterman)

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