Britain’s top share index steadied near two-month highs yesterday, with a sell-off in financials offset by a crop of solid updates in the healthcare and retail sectors.

Investors are scrutinising corporate updates for clues on whether the quarterly reporting season will be sufficiently strong to justify the relatively expensive valuations at which the equity market currently trades.

So far the signals have been mixed.

Sainsbury rose 2.6 per cent thanks to industry data showing it was the only major British grocer to resist pressure from discounters and keep market share over the key Christmas trading period.

Also among the gainers, Astrazeneca rose 2.5 per cent after forecasting a faster-than-expected return to growth, while rival Shire added 2.7 per cent in a late rally after saying earnings growth would come in at the upper end of earlier guidance.

The updates, however, were not enough to push the FTSE 100 out of its recent trading range, especially given weak updates in ther sectors.

“This year it seems that earnings will matter even more... so I think stock picking will become more important, rather than what the passive investor has become accustomed to,” said Brenda Kelly, analyst at IG Markets.

“The FTSE is still trapped in a channel range unable to break through 6,770... We have yet to see a weekly close above the 6,754 level and unless this occurs we can expect to see a sideways to a downside bias for the index.”

The FTSE 100 closed up 0.1 per cent at 6,766.86 points, failing to hold onto an earlier two-month intraday high of 6,772.63 points.

Financial stocks put downward pressure on the index after news of steep client outflows at mid-cap Ashmore.