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Easing Syrian tensions boost FTSE to near one-month high

By Alistair Smout

LONDON (Reuters) - The FTSE 100 rose to its highest level in nearly a month on Tuesday, bolstered by the outlines of an international compromise to avert a U.S. strike on Syria, with airlines benefiting as oil prices fell.

There was also strength in the resources sector after an upbeat report from miner Glencore Xstrata and robust Chinese data.

Budget airline easyJet was the biggest gainer in percentage terms, up 7.2 percent after Syria accepted a Russian plan to put its chemical weapons under international control, cutting the risk of military intervention.

EasyJet rebounded to its highest level in a month in volume of over twice its daily average, regaining ground lost earlier in September when fears of instability in the region first knocked the stock back. Fellow airline group IAG rose 4.7 percent.

The FTSE 100 was up 53.25 points, or 0.8 percent higher, at 6,583.99 by the close. The index has gained 3.1 percent in 12 days, but remains 3.7 percent off 13-year highs hit in May.

"We've had quite a steep run, and (U.S. Secretary of State) Kerry's off-the-cuff comments (on Syria's chemical weapons) seem to have got us into a much better position than anyone could have imagined...

"The price of oil dropped about three dollars in an hour, so you're going to have the airlines loving that," Mike van Dulken, head of trading at Accendo Markets, said.

He said the longer term graph showed some resistance. "Since the big correction in May, there's a trendline of falling highs to deal with around 6,630, should we push on."

Shares in Glencore Xstrata rose 2.3 percent after it upped its forecast for synergies from last year's merger to at least $2 billion for next year from initial guidance of $500 million, and hinted at further savings ahead.

Glencore and Rio Tinto, which benefited from a target price upgrade by JP Morgan, led miners higher, and combined to add six points to the FTSE 100.

"The fact that Glencore Xstrata will see synergies in excess of $2 billion is giving it a real boost, although there's still plenty more upside there," Alastair McCaig, analyst at IG, said.

The mining sector was also boosted after stronger-than-expected industrial output reinforced other signs that China's economy is stabilising.

Housebuilders including Persimmon were also among gainers after British property prices recorded their fastest rise in almost seven years last month and a measure of sales volumes jumped to a multi-year high.

Credit Suisse cited strong economic data as one of the reasons why it was sticking to its overweight on UK equities.

"On our macro momentum scorecard, the UK scores second top," the bank's analysts wrote in a note, adding that "policy looks to stay very reflationary", with prospects for more fiscal easing in the run-up to elections due in 2015.

(Additional reporting by Toni Vorobyova; Editing by Ron Askew)