* FTSE up 0.9 percent, technicals point to further upside
* Miners lifted by record metal prices, RIO Tinto M&A
* Unicredit urges investors to buy insurers
By David Brett
LONDON, April 8 (Reuters) - Rallying miners pushed Britain's
top share index higher on Friday, boosted by M&A activity and
record high metal prices, as analysts saw further upside
momentum to the index's recent rally.
By 1058 GMT, the FTSE 100 <> climbed 53.68 points or
0.9 percent to 6,061.05, having closed down 0.6 percent in the
previous session.
"Quotes remain within an upward sloping channel drawn from
March 25 and the 30-minute relative strength index is holding
above its support base around 35," Philippe Delabarre, technical
analyst at Trading Central, said.
"Furthermore, a broadening wedge is taking shape and calls
for a further rise."
London's blue chip index has rallied near 8 percent since
its March low and edged closer to its 2011 high of 6,105.77,
following the lead set by Asian markets after it appeared a
strong aftershock that struck Japan's earthquake-ravaged
northeast late on Thursday had not done major damage.
"Another strong earthquake in Japan temporarily unsettled
the capital markets on Thursday. Yet investors subsequently
shifted their attention back to the good macro data," Stefan
Angele, Head of Investment Management, Swiss & Global Asset
Management, which has around 80 billion swiss francs of funds
under management.
Angele sees the IT sector as well as energy and materials
benefiting most from the global economic recovery and the
business cycle.
Miners <.FTNMX1770> gained after gold and silver struck
record highs on Friday. A weaker dollar and concerns about
inflation sent investors piling into precious metals.
[]
Global miner Rio Tinto <RIO.L> rose 1.8 percent after it
assumed control of Mozambique-focused coal miner Riversdale
<RIV.AX> [].
Indian-focused miner Vedanta <VED.L> gained 1.2 percent
after fourth-quarter production figures. But uncertainty lingers
over its long-delayed purchase of Cairn Energy's <CNE.L> Cairn
India unit <CAIL.BO>. []
INTEREST RATE CONUNDRUM
UK Government data showed producer output prices rose by 5.4
percent, confounding expectations of a slowdown to an annual 5.1
percent. []
This would likely raise expectations of a interest rate
rise. Investors are almost fully pricing in a 25 basis point
rate hike in July with a better than a 50 percent chance being
priced in for May. [] []
The buy case for equities remained strong compared to other
asset classes, according Citigroup analyst Jonathan Stubbs.
"Absolute valuations are around average, while equities
continue to look attractive relative to bonds in a more
inflationary world," he said.
"We forecast double digit returns for equities as markets
track expected earnings growth in 2011. Stay bullish."
Insurers were among the top performers on the FTSE 100,
helped by a note from UniCredit, which recommended investors to
long the sector <.SXIP> and short retailers <.SXRP>.
The broker says the European Central Bank's interest rate
rises will be supportive to the insurance sector though the
monetary tightening will crimp consumer spending.
Old Mutual <OML.L>, which completed the sale of its U.S.
life business to Harbinger Group on Thursday, rose 2.3 percent,
while Prudential <PRU.L> added 1.9 percent.
Shire <SHP.L> gained 1.6 percent after an after an update
from U.S. regulator FDA on a safety review of hyperactivity
medications, including the pharma company's Vyvanse and Adderall
XR, recommends no changes to the labels or use of the
medications at this time.
Utility Scottish & Southern Energy <SSE.L> climbed 1.6
percent as Credit Suisse upgraded its stance to "outperform".
A downgrade to "underperform" from "neutral" by the same
broker, however, saw broker ICAP <IAP.L> shed 4.3 percent.
Intertek <ITRK.L> fell 1.7 percent as JPMorgan cut its
rating on the testing firm to "neutral" from "overweight", on
valuation grounds.
(Editing by Hans Peters)
