* FTSE 100 index rises 0.4 percent
* Miners get boost from Alcoa's positive outlook
* Banks led up by Lloyds after upgrade
* Slow sales growth hits Sainsbury's despite meeting targets
LONDON, Jan 9 (Reuters) - Britain's blue-chip stocks rose on
Wednesday, led by banking stocks and miners, as a reassuring
start to the U.S. earnings season boosted investors' appetite
for riskier assets.
Miners were set for their first gains in a week
as investors welcomed news that Alcoa, the largest
aluminium producer in the United States, posted in-line
fourth-quarter earnings after the Wall Street close on Tuesday
and offered a positive outlook for 2013.
"This uptick on the FTSE is a reaction to Alcoa, and
people's expectations for earnings in the U.S.," said James
Butterfill, global equity strategist at Coutts.
"As has been for quite a few quarters now, analysts are
overly bearish for fourth quarter results. So it seems that
we'll see earnings beat expectations for another quarter in the
U.S., and that will help to support stocks."
Butterfill said that if earnings came in ahead of
expectations for the fourth quarter, it would be the 15th
consecutive quarterly earnings beats in succession on the
S&P500, bar a minor earnings miss at the end of 2011.
Banks added 12.5 points to the index, with
Lloyds Banking Group the best performer, up 5 percent
as traders cited the impact of a UBS upgrade to "buy" from
"neutral" with an increased target price of 60 pence.
"We think Lloyds will deliver rising margins, falling costs
and falling provisions, which will provide a very strong upswing
to profitability and EPS momentum over the next few years," UBS
said in a note.
The FTSE 100 was up 23.60 points, or 0.4 percent, at
6,077.23 by 1158 GMT, resuming a rally that took it to its
highest closing level since early February 2011 on Friday,
having slipped on Monday and Tuesday of this week.
The index is now up 3 percent for 2013 only a week into the
year, just over half the total 2012 gain of 5.8 percent.
"We continue to have a constructive outlook for equities.
It's a combination of a pick-up in economic activity... ongoing
policy support and lower systematic risk, relative to the last
year or so," Christopher Ferrarone, global equity strategist at
UBS in Hong Kong, said.
UBS' Risk Appetite Indicator hit 20-month highs after U.S.
politicians reached a fiscal compromise on New Year's day, and
Ferrarone expected growth to support equity prices so long as
outstanding issues in the U.S. budget negotiations were resolved
without drama.
"After a fairly broad-based deterioration in economic
activity last year, we have seen economic activity pick up,
initially in the U.S. but also notably in China. The improvement
in economic activity that we've seen develop over the last
several months is fairly broad-based, and we do look for that to
continue in the months ahead."
However, sluggish growth from last year had a hangover on UK
retailers, with J Sainsbury losing 2.9 percent and
relinquishing the previous session's advance as it issued a
trading update which prompted Seymour Pierce to cut its rating
on the stock to "reduce".
Britain's No. 3 supermarket met forecasts for underlying
sales in the Christmas quarter but growth slowed from its first
half in a highly competitive festive market.
"We suspect Sainsbury will struggle to outperform in 2013 as
Tesco continues its fight back and there is some margin
vulnerability as momentum slows," Seymour Pierce said in a note.
For a graphic showing UK retailers' share price performances
* Miners get boost from Alcoa's positive outlook
* Banks led up by Lloyds after upgrade
* Slow sales growth hits Sainsbury's despite meeting targets
LONDON, Jan 9 (Reuters) - Britain's blue-chip stocks rose on
Wednesday, led by banking stocks and miners, as a reassuring
start to the U.S. earnings season boosted investors' appetite
for riskier assets.
Miners were set for their first gains in a week
as investors welcomed news that Alcoa, the largest
aluminium producer in the United States, posted in-line
fourth-quarter earnings after the Wall Street close on Tuesday
and offered a positive outlook for 2013.
"This uptick on the FTSE is a reaction to Alcoa, and
people's expectations for earnings in the U.S.," said James
Butterfill, global equity strategist at Coutts.
"As has been for quite a few quarters now, analysts are
overly bearish for fourth quarter results. So it seems that
we'll see earnings beat expectations for another quarter in the
U.S., and that will help to support stocks."
Butterfill said that if earnings came in ahead of
expectations for the fourth quarter, it would be the 15th
consecutive quarterly earnings beats in succession on the
S&P500, bar a minor earnings miss at the end of 2011.
Banks added 12.5 points to the index, with
Lloyds Banking Group the best performer, up 5 percent
as traders cited the impact of a UBS upgrade to "buy" from
"neutral" with an increased target price of 60 pence.
"We think Lloyds will deliver rising margins, falling costs
and falling provisions, which will provide a very strong upswing
to profitability and EPS momentum over the next few years," UBS
said in a note.
The FTSE 100 was up 23.60 points, or 0.4 percent, at
6,077.23 by 1158 GMT, resuming a rally that took it to its
highest closing level since early February 2011 on Friday,
having slipped on Monday and Tuesday of this week.
The index is now up 3 percent for 2013 only a week into the
year, just over half the total 2012 gain of 5.8 percent.
"We continue to have a constructive outlook for equities.
It's a combination of a pick-up in economic activity... ongoing
policy support and lower systematic risk, relative to the last
year or so," Christopher Ferrarone, global equity strategist at
UBS in Hong Kong, said.
UBS' Risk Appetite Indicator hit 20-month highs after U.S.
politicians reached a fiscal compromise on New Year's day, and
Ferrarone expected growth to support equity prices so long as
outstanding issues in the U.S. budget negotiations were resolved
without drama.
"After a fairly broad-based deterioration in economic
activity last year, we have seen economic activity pick up,
initially in the U.S. but also notably in China. The improvement
in economic activity that we've seen develop over the last
several months is fairly broad-based, and we do look for that to
continue in the months ahead."
However, sluggish growth from last year had a hangover on UK
retailers, with J Sainsbury losing 2.9 percent and
relinquishing the previous session's advance as it issued a
trading update which prompted Seymour Pierce to cut its rating
on the stock to "reduce".
Britain's No. 3 supermarket met forecasts for underlying
sales in the Christmas quarter but growth slowed from its first
half in a highly competitive festive market.
"We suspect Sainsbury will struggle to outperform in 2013 as
Tesco continues its fight back and there is some margin
vulnerability as momentum slows," Seymour Pierce said in a note.
For a graphic showing UK retailers' share price performances
UK shares rise as U.S. earnings get off on the right foot
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UK shares rise as U.S. earnings get off on the right foot
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UK shares rise as U.S. earnings get off on the right foot
