By Atul Prakash
LONDON (Reuters) – Britain’s top share index rose in early trading on Thursday, with positive corporate news from companies such as Aviva and Aggreko and easing tension in Ukraine prompting investors to buy riskier assets.
Aggreko, the world’s biggest temporary power provider, climbed 9.1 percent to the top of blue-chip FTSE 100 index after saying it would return 200 million pounds ($ 334 million) to shareholders.
British insurer Aviva rose 8 percent on a 6 percent increase in its operating profit for 2013 and proposing a final dividend of 9.4 pence per share, while fund manager Schroders gained 5.7 percent following its higher-than-expected pre-tax profit growth for 2013.
“People are starting to concentrate more on corporate earnings now after a jolt with the Ukrainian situation. Unless things suddenly get worse there again, we are looking forward and concentrating on fundamentals of the market,” David Battersby, investment manager at Redmayne-Bentley, said.
“If you look at the price-to-book ratio or the dividend yield, there is still value to be had. We are not as cheap as were, but we are not necessarily expensive yet. And if we can see a recovery coming through in the underlying companies, then that provides support to equity prices going forward.”
According to Thomson Reuters Datastream, the blue-chip FTSE 100 index trades at 13.2 times its one-year forward earnings, against a 10-year average of 11.9 times.
At 0847 GMT, the FTSE 100 index was up 0.4 percent to 6,800.69 points after falling 0.7 percent on Wednesday. It traded just about 2 percent below its record high in late 1999.
Cyclical sectors were in demand, with UK banking index gaining 0.9 percent and the mining index up 1.4 percent.
The market awaited the outcome of central bank meetings scheduled later in the session. The Bank of England is likely to keep its interest rates on hold, but the European Central Bank is expected to take action to loosen lending conditions and pull inflation out of a “danger zone”.
Investors kept an eye on the situation in Ukraine, but were betting that the geopolitical situation will further improve. U.S. Secretary of State John Kerry said discussions about Ukraine would continue in the coming days, and he expected to meet Russian Foreign Minister Sergei Lavrov again in Rome on Thursday.
(Reporting by Atul Prakash; Editing by Toby Chopra)
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