Barclays (LSE: BARC.L – news) ‘ equity strategists see Britain’s blue-chip FTSE 100 index ending 2014 at a record level of 7,400 points, which would mark a rise of around 13 percent from current levels, arguing the market should benefit from better corporate earnings, and mergers and acquisitions.

“With the UK market up by 70 percent since the end of 2008, by definition, this equity ‘cycle’ is not in its infancy. Some may argue that the rally is long in the tooth already and upside from current levels limited,” Barclays’ UK equity strategist Ian Scott writes in a note.

“However, we would argue that the outlook is one in which valuations are either in line or below historical averages, earnings growth only now showing signs of accelerating and, corporate activity is likely to increase,” he adds.

The Barclays’ forecast for the FTSE echoes a similarly bullish call by Deutsche Bank (Xetra: DBK.DE – news) strategists earlier this month, in which the German bank forecast the FTSE hitting 7,500 points by the end of 2014.

The FTSE 100 is trading on a 12-month forward price/earnings ratio of around 13 times, compared with its five-year average which stands at around 11 times, according to Thomson Reuters Datastream.

Thomson Reuters StarMine data also predicts that the FTSE 100 should have an average growth in earnings of 7.2 percent over the next year, according to the StarMine “SmartEstimate” which favours top-rated analysts.

For graphic on FTSE valuations:

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