950804

Blue chips quietly

higher in UK

LONDON: Blue chips closed quietly higher as shares looked to consolidate after a week in which the FTSE 100 breached 3,500 for the first time since February 1994, dealers said.

With no major economic figures out in the UK the focus was on U.S jobs data for July and equities gave a subdued response to weaker-than-expected payroll numbers.

"It's been very slow today as people stepped back from the market and the U.S. figures were sufficiently mixed to keep things quiet in the afternoon," said one senior trader.

The FTSE 100 closed 6.8 points higher at 3,482.4.

"A lot of money from institutions is finding its way back into the market," he said.

Recent takeovers, many of them cash-based, and the possibility of more to come has deterred selling while fears low returns on cash may impact performance is prompting fund managers to reinvest. "We have a target of 3,500 on the FTSE 100 and we're staying at that level," said Wright. "The market may see 3,600 but we'd certainly take steps to change weightings at that level." Valuations support a move to fresh highs according to SGST strategist Corey Miller.

Gilts followed U.S. bonds up, the September long gilt future ending 23/32 ahead at 106-10.

But worries about strength in the U.S. economy remain.

"The data fits into the pattern that the (U.S.) economy is uncomfortably strong," said Nick Knight, strategist at Nomura.

"We could be looking at a situation that worries equities as well as bonds," he said.

Among individual movers, the electricity sector recovered from early news that Trafalgar House will not make an offer for Northern Electric within the 21 day limit recently imposed by the Takeover panel.

Analysts say Northern Electric's defence package of benefits, such as special dividends, continues to make the shares attractive. Northern Electric ended 11p higher at 905 and Trafalgar 2p lower at 41.

UK insurers gained on sector optimism following on Thursday's better-then-expected results from Guardian Royal Exchange. nL03257415.

Inchcape climbed 19-1/2p to 324-1/2 after Smith New Court raised its recommendation to buy from hold. -Reuter