Monday, August 12 12:41:22
Britain's top share index snapped a two-day winning streak to edge lower today, as technical traders cashed in on signs of fading conviction among buyers.
The FTSE 100 was down 23 points, or 0.4 percent at 6,560.44 points, with sellers moving in after the index failed to break 6,600, a closely watched psychological level which has capped its value since last week.
"This is a bit of profit-taking, I don't think it's any kind of fundamental movement," said Steve Ruffley, chief market strategist at spreadbetting provider InterTrader.
But Ruffley cautioned: "If you start to break back below (last week's low at around) 6,509, then we're going to definitely see the market hit 6,487, which is the lower Bollinger band."
Bollinger bands are charted by calculating a moving average of prices and then creating two bands at a specified number of standard deviations above and below the moving average. They can be used to identify "overbought" and "oversold" conditions.
Traders also highlighted that U.S. index futures pointed to a lower start for the Dow Jones Industrial Average index, which has a 70 percent correlation with the FTSE and posted its biggest weekly decline since June last week.
The FTSE is up around 12 percent year-to-date but has struggled to make much headway since the start of August as investors fret about a possible reduction of British and U.S. monetary stimulus in the coming months.
Trading volume was thin on Monday at around 20 percent of the index's full-session 90-day average, meaning the size of any move could be magnified by a lack of liquidity in the market.
With little in the way of corporate news, traders focused on some of the year's best performers to take some profit.
Airlines IAG and EasyJet, which had risen nearly 80 percent since the start of the year, were the top FTSE fallers on Monday.
EasyJet traded at 14 times its expected earnings for the next 12 months, the highest multiple since 2009, while IAC traded at 15.4 times, Thomson Reuters data showed. (Reuters)