Britain's leading stock index will rise 5 percent by the end of the year on expectations of more money-printing by the Bank of England, but won't get very far with the economy in recession and the eurozone crisis still burning, a Reuters poll found.
Relatively cheap shares and the UK's perceived safe-haven status will also provide support as politicians wrangle over the future of the euro. But the global economy is weak, with the eurozone seen at risk of recession and the United States, another major trading partner, growing at a lacklustre pace.
The FTSE 100 is expected to rise to 5,800 points by year-end, according to a poll of more than 40 market participants, a 5 percent gain on Wednesday's close of 5,523.92 points but down from the March poll's target of 6,100 points.
The broad range of forecasts - from 4,800 points to 6,400 points - underlined how tough it is to predict developments in a market driven by hope, fear and politics.
Concerns about contagion throughout the euro zone, Britain's largest export market, from a possible exit by Greece has pummelled European stock markets this year.
Spain has already secured up to 100 billion euros of aid for its banks, but speculation is still rife about whether, and how soon, it may need a sovereign bailout.
"There's a lot of emotional pessimism in the market and it's very difficult to identify exactly which week, month or quarter that is going to change," said Darren Winder, head of strategy at Oriel Securities. "But the stock market does not reflect underlying profitability; it hugely underestimates it."
The bearishness baked into the current price of the FTSE 100 is marked, implying as it does a contraction in earnings per share of 6.1 percent a year for the next five years, on a compounded basis, Thomson Reuters StarMine data showed.
As with many of the forecasts collected around the world for the latest Reuters poll, the case for a rise in stocks is paradoxically based on a belief that the quagmire Europe finds itself in, and a deteriorating global economic backdrop, will trigger another flood of central bank cash.
A rally at the start of the year following the European Central Bank's injection of more than 1 trillion euros into the tightened money markets wore off as many had predicted, replaced by swings driven by political headlines out of Europe.
The Bank of England is now widely expected to announce another round of money printing in July. But how and when the European Central Bank and US Federal Reserve may next intervene is less certain.
If and when the next liquidity rally does kick off, the large amount of cash sitting on the sidelines could add weight to any move higher, said Mike McCudden, head of retail derivatives at Interactive Investor.
"I expect some pretty large scale stimulus intervention in China, which should propel the miners ... higher and make the UK market attractive. Plus it's a relative safe-haven in troubled times," McCudden added.
Heavyweight metals and mining shares are down 11 percent in the year to date, following a 29 percent fall in 2011, Thomson Reuters data showed.
US elections in November and uncertainty about the impact on growth of the so-called "fiscal cliff" of expiring tax breaks and spending cuts in the new year will be crucial in determining FTSE performance into 2013, the poll found.
The median target of 30 respondents for this time next year was 6,000, a near 9 percent increase from current levels, with the full range of forecasts still wide at 5,000 to 6,975 points.