The Automated Teller Machine Business Club

Wed Jul 20, 2011 7:33am EDT

* FTSE up 1.0 percent

* U.S. debt deal hopes boost risk appetite

* Fund manager eyes value among insurers

By David Brett

LONDON, July 20 (Reuters) – Bargain hunters sniffing around
cheap financials and miners helped push Britain’s FTSE 100
higher on Wednesday, as hopes that a deal could be reached in
the U.S. to stave off defaulting on its debt and bullish
corporate earnings lifted sentiment.

The FTSE 100 was up 59.01 points, or 1.0 percent,
at 5,849.00 by 1100 GMT, extending the previous session’s 0.7
percent rise as investors tucked into beaten down equities such
as insurers, banks and miners .

The UK’s benchmark index trades on a one-year forward price
earnings ratio of around 9 times, compared to a historic average
of more than 14 times, according to Thomson Reuters data.

Barclays added 3.1 percent, while insurer Standard
Life rose 1.5 percent, and miner BHP Billiton
climbed 2.5 percent.

“A lot of areas worth looking at. This morning I’ve taken
the opportunity to add to some shares that have clapped out,”
said Paul Mumford, who manages a 25-million-pound fund at
Cavendish Asset Management

Mumford said he has been picking up insurers at “pretty
darned attractive levels”, citing buys in Aviva and
Standard Life , which he said have been hit by concerns
over potential exposure in sovereign debt bonds.

Opportunistic investors have taken advantage of a 5 percent
fall from July 7 on London’s Blue Chip index, when investors’
jitters returned over debt contagion in the euro zone and two
ratings agencies threatened the U.S.’s top-notch credit rating.

President Barack Obama, however, attempted to assuage
investors’ fears as he seized on a plan that could revive
stalled U.S. debt talks and the prospect of a 10-year deficit
reduction deal to avert a default.

“Doing anything over 10-years has a suspiciously Greek
accent to it but if it gets the ceiling raised markets can
presumably overlook the somewhat unsettling parallel,” Paul
Donovan a senior economist at UBS said.

Investor appetite for equities over other asset classes also
increased after the Bank of England’s Monetary Policy Committee
judged recent economic weakness had reduced the chance interest
rates would need to rise in the near term.

U.S. stock index futures pointed to a higher open on Wall
Street on Wednesday, boosted by Tuesday’s strong reading for
June U.S. housing starts and Apple’s results overnight
and ahead of June U.S. existing home sales data at 1400 GMT.

TECHS CHIP IN

Chip designer ARM Holdings , whose technology is used
in the most of the world’s smartphones and tablets, was the top
riser on the FTSE 100, up 3.6 percent.

The firm’s shares got a leg up as results from Apple
reinforced analyst views that corporates can defy the
gloomy economic picture, after the maker of iPhones and iPads
reported revenue above estimates.

FTSE 250 chip maker Imagination Technologies
was up 8.7 percent.

Meanwhile, BHP Billiton climbed after the world’s
biggest miner set the stage for a record full-year profit of
around $21 billion after coal output topped forecasts.
.

Oil major BP added 2.3 percent with traders citing
rumours that Anadarko Petroleum Corp will bring a
settlement with the UK oil major forward.

MA remained a feature among London-listed shares as their
cheap valuation continue to attract interest from potential
bidders.

Misys rose 9 percent on media reports that the U.K
financial software maker is close to an agreement to be bought
by Payment services provider Fidelity National Information
Services Inc .

Back among the blue chips, ITV was 3.5 percent
higher after UBS retained its “buy” recommendation on the
British terrestrial TV broadcaster on valuation grounds in a
note on European broadcasters.

ITV shares have fallen more than 28 percent since their 2011
highs in early March, and trade on a forward price-to-earnings
of just 9.1 times, Thomson Reuters data showed.

On the downside, AstraZeneca fell 1.2 percent after
U.S. health advisers rejected its new once-a-day type 2 diabetes
drug dapagliflozin.

The setback came ahead of a more important U.S. Food and Drug
Administration decision, due on Wednesday, on whether to approve
AstraZeneca’s key new heart drug Brilinta

Ex-dividend factors clipped 1.47 points from the FTSE 100
index on Wednesday, with ICAP and Imperial Tobacco
losing their payout attractions.
(Additional reporting by Stephen Eisenhammer; Editing by Jon
Loades-Carter)

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