* FTSE 100 up 0.2 percent
* Rolls Royce (LSE: RR.L – news) up on power systems unit stake buy
* Miners fall after weak Chinese trade data
By Tricia Wright
LONDON, March 10 (Reuters) – Britain’s top shares recovered on Monday after steep falls in the previous session, led by Rolls Royce as investors welcomed an acquisition, though weakness in miners on downbeat China data kept market gains in check.
Rolls-Royce advanced 3.2 percent after the engine maker announced a buy out of German carmaker Daimler (Xetra: 710000 – news) ‘s stake in their power systems joint venture.
“The market has taken the news well this morning from RR’s perspective,” said Saxo Bank trader Adam Seagrave.
“They are well positioned to finance the deal from their net cash balance, and whilst the venture has already added new capability to RR’s reciprocating engines business, the feeling is they will be able to extract further synergies in a long-term growth market.”
Trading volume in Rolls Royce stood at around a third of its 90-day daily average after just an hour’s trade, compared with turnover at 12 percent of the average for the whole FTSE 100.
Broader market sentiment was darkened by poor exports data from China, which reignited concerns about slowing growth in the world’s top metals consumer. Mining (LSE: MIR.L – news) stocks were left trading 1.2 percent lower.
The FTSE 100 was up 9.98 points, or 0.2 percent, at 6,722.65 points by 0857 GMT, having sunk 1.1 percent on Friday when a landmark corporate bond default in China knocked the mining sector.
Analysts stressed that any market swings should be seen in the context of an equities rally which has helped the UK benchmark bounce nearly 5 percent off lows of early February.
That has left the FTSE 100 trading on a 12-month forward price/earnings ratio of 13.3 times, against 12.9 times at the beginning of February, Thomson Reuters Datastream shows.
“(We’re at) the higher end of that recent trading range therefore if you get some slightly more negative developments (they are felt keenly by the market),” Peel Hunt equity strategist Ian Williams said. “What we have seen is any kind of more serious dips just continue to be bought.”
As such, technical analysts retain a bullish stance on the FTSE 100, which is above its 50-day moving average of 6,711.
“The 50-day moving average is still holding as support but a close below last week’s low, at 6,671 or so, would suggest that investors have become less concerned about increasing profits, and more focused on protecting gains already achieved,” said Bill McNamara, a technical analyst at Charles Stanley (LSE: CAY.L – news) .