BRITAIN’S top share index was on course for its best weekly gain this year as it inched higher on Friday, boosted by strong UK retail sales data and a rally in motor insurer stocks.
The outlook for corporate profits, however, was less upbeat, with heavyweight Royal Dutch Shell warning on its future profitability.
Insurer Admiral Group rose 6.7 per cent to the top of the FTSE 100 as data showed a multi-year decline in car insurance prices slowed in the last quarter of last year, potentially opening the door for some earnings upgrade for shares in the industry.
“The trend would be consistent with a stabilisation and, hopefully, an improvement in prices sometime in 2014,” said Ben Cohen, an analyst at Canaccord Genuity.
Analysts have cut their profit estimates for insurers in the FTSE 350 index by 0.7 per cent in the past three months, with non-life insurance companies such as eSure, Direct Line and RSA Insurance Group suffering some of the steepest downgrades.
The three stocks rose between 1 per cent and 5.7 per cent on Friday, with the broader FTSE 350 non-life insurance up 1.5 per cent.
The blue-chip FTSE 100 index was up 7.12 points, or 0.1 per cent, at 6,822.54 points at 1546 GMT.
Sentiment was also supported by data showing British retailers reported the fastest annual sales growth in more than nine years in December, with activity expanding at more than double the expected pace.
The FTSE is up 1.2 per cent so far this week, its biggest rise since late last year, and it has risen nearly 12 per cent in the past 12 months.
Andy Ash, head of sales at Monument Securities, said he was taking profit on the FTSE in light of weak corporate earnings, especially in the U.S., at a time when the Federal Reserve starts to reduce its equity-friendly stimulus programme.
Royal Dutch Shell’s two listings knocked a combined 12 points off the FTSE after the oil major warned its fourth-quarter figures are expected to be significantly lower than recent levels of profitability because of oil and gas prices and problems with its refining business.
Bookmaker William Hill was the top FTSE faller on concerns about tighter gambling rules in Britain after it said on Friday it would work with the government to tackle concerns about the use of high stakes gambling machines in its betting shops.
The stock fell 3.2 per cent in volume three times its average for the past three months, compared with FTSE volume 15 per cent above the index’s own average.
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