By David Brett
LONDON (Reuters) - The FTSE top share index closed within sight of its all-time high on Tuesday, lifted by mining stocks and positive corporate news from luxury retailer Burberry among others.
The FTSE 100 index ended up 48.24 points, or 0.7 percent, at 6,803.87, its highest finish since its record close of 6,950.60 in late 1999.
"There is nothing to suggest that we can't keep going higher. We have broken through previous highs and it can be sustained if we see economic recovery and earnings upgrades come through," Neil Shah, director at Edison Investment, said.
Recent UK data has suggested the economy may be picking up and further upbeat data from Britain and other major economies would help support equity valuations, which have re-rated to post credit crisis highs of around 12.8 times 12-month forward price-to-earnings.
Shah said stocks becoming too expensive or central banks reversing stimulus policies on concerns over asset bubbles were the only potential stumbling blocks in the way of the current rally.
Corporate updates on Tuesday fuelled further optimism in the market.
Outsourcing company Capita climbed 5.9 percent after winning a 1.2 billion pound ($1.8 billion) contract with Telefonica's UK O2 mobile phone business.
British luxury group Burberry rose 5.3 percent after announcing a better-than-expected 14 percent rise in profit.
British retailer Marks & Spencer also jumped, by 6.2 percent, as investors put their faith in a turnaround after the firm posted a profit that was its lowest since 2009 but just above consensus forecasts.
It was not all rosy. Cruise operator Carnival fell 5.5 percent after slashing its full-year earnings outlook for the second time in less than three months.
Miners, down 12.4 percent in 2013 before today on earnings and pricing concerns, were the top performing sector as Societe Generale's commodities team said the sell-off in base metals prices had been overdone and Chinese restocking would feed a rally.
Technical analysts said the recent bounce on the FTSE 100 from the 6,710 zone suggests the rally still has legs and with the highs of 2007 now tested and exceeded, there is little major resistance until the all-time high.
Still, recent gains have forced many investors betting on a retreat in the market to close out positions and David Lewis, head of EMEA stock lending at Sungard's Astec Analytics, said the market remained cautious.
"The value of stock on loan has fallen by a fifth in the last month," he said. "However, though many traders have closed out short positions, short interest remains 40 percent higher than the average of the last 12 months, suggesting that a lot of people are betting on a correction."(Editing by Susan Fenton)
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