FTSE flat, traders hold breath before stress test

Nerves about the keenly awaited stress tests on European banks weighed on the sector in Britain, offsetting gains from Vodafone after solid first quarter results to leave the country's index flat by close on Friday. The FTSE 100 ended down 1.19 points at 5,312.62, after it closed up 99.17 points, or 1.9 percent, on Thursday.
Banks took the most points off the index, retreating after good gains in the previous session, as investors awaited the outcome of an examination by regulators of the financial strength of banks across Europe. "The fact that the results are coming out after the market shuts, and the fact that we are back up near highs seen in June means there are plenty of reasons for investors to hold back," said David Jones, chief market strategist at IG Index. He said the FTSE 100 is close to levels last seen around a month ago and that looking at the relative strength index it is looking the most overbought it has been since early April.
Regulators have been looking at how banks would withstand another recession in an exercise similar to one in the United States last year which helped restore bank sector confidence. HSBC fell 1.3 percent while Barclays lost 0.5 percent. Royal Bank of Scotland, majority owned by the British government bucked the trend, up 1.4 percent. Vodafone was the biggest single support to the index, up 1 percent with a 1.1 percent rise in organic service revenue helped by improvements in Germany, Britain and Turkey.
Miners were a bit firmer, building on the previous session's advance against a backdrop of firmer metals prices following recent reassuring US data. Kazakhmys and Anglo American were the best sector performers, putting on 1.9 percent and 1.8 percent respectively.
Positive economic data showed Britain's economy growing almost twice as fast as expected in the second quarter of this year, propelled by a sharp pick-up in services and the biggest rise in construction in almost 50 years. This helped sterling to be on course for its biggest one-day gain against the euro in more than seven weeks, but had little impact on the internationally focused FTSE 100.
Among individual movers, chip designer ARM Holdings grabbed the top spot on the blue chip leader board, up 11.6 percent after it signed a new licensing agreement with software giant Microsoft. ARM was also boosted by a read-across from Microsoft, which on Thursday easily beat Wall Street forecasts with a 48 percent rise in quarterly profit.