Profit-taking holds FTSE back

Momentum in the UK blue-chip index is somewhat lacking this morning, yet the FTSE seems poised to end the week on a five-month high.

Short term, the market looks overbought, and this combined with the mixed corporate earnings emanating from Europe is inciting a degree of profit-taking.

Topping the UK benchmark index, Polymetal International has been the beneficiary of a broker upgrade and has added 3.3% this morning. Q3 revenues, which were released two weeks ago, were well below expectations. But the recent northward moves in gold prices may help to neutralise this going into the final quarter.

BSkyB has been shrugging off challenges from rivals, and continues to dominate the market, so it was no surprise that the share price succeeded in hitting a 12-year high this month. Today has seen some profit-taking, and the share has declined by 2.2%.

A rise of 0.8% in UK GDP for the third quarter, in line with expectations, can only be construed as positive, particularly since it’s the strongest pace of growth in over three years. However, the Bank of England governor has been at pains to temper too much enthusiasm, and it is worth remembering that the UK economy is well below its pre-crisis peak: a whole 2.5% lower. The pound has had a pop at moving higher against the US dollar, and may well present a valiant challenge to the recent nine-month high.

German IFO business climate fell slightly this month, with businesses seemingly less optimistic than before, printing 107.4 against an expectation of 108. The level is still above average, and the slight drop can be attributed to a small fall-back in manufacturing.

With some key, high-profile companies like Facebook and Apple due to report next week, trading may be rather lacklustre today stateside. The Dow is set to open eight points lower at 15,501.

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