FTSE steadies near 14-yr high, record peak is next target

Reuters - UK Focus

* FTSE 100 index ends 0.08 pct higher

* Stock market outlook positive, record high eyed

* ITV (LSE: ITV.L - news) slips after disappointing update

By Atul Prakash

LONDON, May 14 (Reuters) - Britain's top share indexsteadied near a 14-year high at the close on Wednesday andremained on track to set a record peak in coming months ongrowing optimism that the economy is on a fast recovery path.

The benchmark FTSE 100 index ended 0.08 percenthigher at 6,878.49 points after touching its highest level sinceDecember 1999 earlier in the session.

Analysts said the market was likely to be supported by animproving economic outlook going forward and any price dipscould prove to be good buying opportunities.

In a further sign that the UK economy was gathering pace,the unemployment rate fell to its lowest level in more than fiveyears in the first quarter, data showed.

"The FTSE remains underpinned by a strong domestic recoveryand foreign bid speculation. Technically it also looks healthy,"Lex van Dam, a hedge fund manager at Hampstead Capital, said.

Traders said the index, which has been helped in recentweeks by a burst of deal-making and bids alongside an improvingeconomy, had the potential to break above the all-time high of6,950.60 points it set in 1999.

"We see the FTSE breaking 6,900, then moving to 7,000. Weare not at the inflection point as yet where equities offerexpensive valuations," Atif Latif, director of trading atGuardian Stockbrokers, said.

According to Thomson Reuters Datastream, the FTSE 100 tradesat 13.7 times its 12-month forward earnings, against a 10-yearaverage of 11.7 times.

Sentiment also improved after the Bank of England said itwas still in no rush to raise interest rates, but some analystssaid it could happen earlier than the market was expecting.

"We maintain our view for the first bank rate hike to comein November 2015," James Ashley, chief European economist at RBC (MCX: RBCM.ME - news)Capital Markets, said. "We remain comfortable with ourprojection for tightening to be a H2 (of 2015) story."

Among individual movers, Compass was up 1.6 percentafter the caterer said it would return 1 billion pounds ($1.7billion) to shareholders through a special dividend and raisedits interim dividend to 8.8 pence per share.

However, gains in the broader market were capped by a sharpdecline in broadcaster ITV, which tumbled 6.2 percentafter the company said its channels had not attracted theaudiences it wanted in the first four months of the year.

Analysts said ITV's second-quarter guidance for netadvertising revenue was just short of their 14 percent forecastand the broadcaster had to make an effort to get back on thefront foot on audience numbers.

Stocks trading ex-dividend, including Royal Dutch Shell (Xetra: R6C1.DE - news) , Glencore Xstrata (Other OTC: GLCNF - news) and GlaxoSmithKline (Other OTC: GLAXF - news) ,also limited the FTSE 100's gains. (Additional reporting by Tricia Wright; Editing by Toby Chopraand Susan Fenton)