FTSE rebounds on strong earnings, easing Ukraine tensions

By Tricia Wright

LONDON (Reuters) – Britain’s top share index recovered some of its poise on Tuesday, with investors heartened by robust corporate earnings from the likes of Ashtead and Glencore Xstrata.

Russia’s move to order its troops to return to their bases also eased some concerns about the crisis in Ukraine, which had rattled markets on Monday.

Industrial equipment hire group Ashtead jumped 8.3 percent after raising its full-year profit target, while Glencore Xstrata rose 2.2 percent on forecast-beating core profit in the first set of full annual results since the merged commodities group was formed.

Broader market sentiment was lifted by Russia’s decision to scale back troop exercises near crisis-hit Ukraine which had severely pressured markets in the previous session.

“As the situation in Ukraine is not worth a larger conflict for any of the superpowers it is most likely that the situation will not escalate and the short-term direction of the market will be higher,” Lex van Dam, hedge fund manager at Hampstead Capital, said.

The FTSE 100 was up 69.95 points, or 1 percent, at 6,778.30 points by 0849 GMT, after dropping 1.5 percent on Monday.

Analysts stressed that the market swings triggered by the tensions in Ukraine should be seen in the context of the recent market rally, which has seen the UK benchmark bounce nearly 6 percent off lows hit at the start of February.

That has left the FTSE 100 trading on a 12-month forward price/earnings ratio of 13.6 times, against 12.9 times at the beginning of February, Thomson Reuters Datastream shows.

“Equity valuations are back up at the top of their recent range so when you get a left-field shock the impact is more dramatic than it would have been if we hadn’t had that run,” Peel Hunt equity strategist Ian Williams said.

(Editing by Susan Fenton)