FTSE pushing a record high

British shares hovered just shy of their record level yesterday as banking stocks and EasyJet drove modest gains, while strong earnings results among mid-cap stocks drove the FTSE 250 to a fresh high.

The FTSE 100 index of Britain’s largest companies was up 0.1% by 10am, near last Tuesday’s record level of 7 533.70 points.

“I think there are reasons why the market can go higher from here. It doesn’t look expensive versus earnings growth, and it doesn’t look expensive in historical terms,” said Callum Abbot of JP Morgan Asset Management.

“The market is trading at 15 times forward earnings, which doesn’t seem unreasonable given you are looking at earnings growth in the mid-teens,” he added, pointing also to the index’s yield being relatively higher than other developed equity markets.

Blue-chip gains were underpinned by banks RBS and Barclays, and defence contractor Babcock. Babcock rose 3% after a positive note from Deutsche Bank saying the stock could rebound if the defence contractor reports solid results today.

Among top gainers, EasyJet rose 2% after a top-rated RBC analyst upgraded the stock, saying the airline had reached its profit nadir, and pointing to an expanding gap of strong customer rankings versus competitors.

The airline’s shares recovered all the lost ground since a badly-received earnings update last week sent the stock tumbling.

Miners dragged on the index after shares in Noble Group sold off aggressively in Singapore, with the firm forced to halt trading after a 32% plunge as S&P downgraded it on weak cash flows and profitability.