FTSE steadies near three-week high, focus on data

By Atul Prakash

LONDON (Reuters) – The FTSE 100 steadied near a three-week high on Wednesday, with losses for firms going ex-dividend offsetting gains in banking and mining shares from a positive economic outlook in the United States.

Pearson, Resolution, Aviva, Tullow Oil and Wolseley fell 0.5 to 3.1 percent after trading “ex-dividend” on Wednesday as investors will no longer qualify for the latest dividend payout from these companies.

The “ex-div” firms, along with Reckitt Benckiser – down 1.7 percent on the back of a target price cut by JPMorgan – took the most points off the blue-chip FTSE 100 index, which was down 0.04 percent at 6,649.50 points by 9:11 a.m. British time after hitting a three-week high earlier in the session.

However, losses were limited by a rise in banking and mining stocks on expectations that more economic data will point to a gradual improvement in the U.S. economic recovery.

Focus will be on the U.S. durable goods orders and ADP National employment numbers ahead of the closely followed non-farm payroll release on Friday. Sentiment improved after the Institute for Supply Management said on Tuesday its index of U.S. national factory activity rose to 53.7 last month from 53.2 in February.

“I was neutral from a short-term perspective going into yesterday’s ISM data, but after seeing above 53 readings, I’m now a short-term bull. Yesterday’s all-time closing high for the S&P should see markets higher this month. I expect continued outperformance from Europe,” said Mike Jarman, chief market strategist at H2O Markets.

Cyclical shares were in demand, with the UK mining index rising 0.5 percent and the banking index gaining 0.2 percent on expectations that U.S. jobs numbers will point to an improvement in the pace of recovery in the world’s biggest economy.

According to a Reuters survey, U.S. job growth likely accelerated in March as the winter’s gloom started to lift. Non-farm payrolls probably rose by 200,000, the largest gain in four months, while the unemployment rate is expected to have dropped a tenth of a percentage point to 6.6 percent.

“U.S. economic data from has proved favourable and Friday’s jobs data is expected to provide additional encouragement,” Keith Bowman, equity analyst at Hargreaves Lansdown, said.

“For now, with the situation in Ukraine having stabilised and global central bank support remaining steadfast, markets are being given further upside leeway.”

The European Central Bank holds a policy meeting on Thursday. The central bank is not expected to announce any new measures to boost the euro zone economy, although inflation dropping to close to zero could prompt active discussion about stimulus.

(Editing by Alison Williams)