By Sudip Kar-Gupta
LONDON (Reuters) - Britain's top equity index is set to end 2014 at a record 7,000 points, according to a Reuters poll, as a strengthening economy and better corporate results push it higher.
Although a number of participants said the market could suffer short-term falls - with a spike in oil prices or more signs of an economic slowdown in China among potential risks - they nevertheless expected any such declines to be temporary.
The Reuters poll of 61 traders, fund managers and strategists gave a median end-2014 target of 7,000 points for the benchmark FTSE 100 index <.FTSE> - up around 4 percent from current levels - and 7,200 points by the middle of 2015.
A majority of investors expect the British economy to maintain its upward momentum and the International Monetary Fund raised its growth forecasts earlier this year.
Britain will hold a general election in May 2015, and interest rates are expected to have risen from a record low of 0.5 percent by then. [ECILT/GB]
"We may have some lows in maybe September or October, but we should finish the year on a strong note," said Mike Mason, senior trader at Sucden Financial.
Among the top global investment banks, Goldman Sachs has an end-2014 target of 7,000 points for the FTSE 100, while Morgan Stanley has a target of 7,220 points.
Both would take the index past its current record high of 6,950.60 points, set in December 1999.
The FTSE is currently trading around where it started 2014, underperforming gains of 3-4 percent on Germany's DAX <.GDAXI> and France's CAC <.FCHI>, partly due to a fall in major mining shares which account for roughly 10 percent of the FTSE.
Atif Latif, director of trading at Guardian Stockbrokers, said merger and acquisition (M&A) activity would also buoy the FTSE later this year.
"We see more positive macro news led by earnings upgrades and economic data. Also, evidence of company share buybacks, M&A and accelerating global growth and GDP estimates allow us, at this juncture, to remain bullish on equities," said Latif.
Graphic on UK GDP, unemployment and productivity:
http://link.reuters.com/dad42v
(Additional polling by Blaise Robinson and Alexandre Boksenbaum-Granier in Paris; Additional reporting by Tricia Wright in London; Editing by Susan Fenton)