Median forecasts of over 20 equity strategists from a survey taken over the last week indicated the FTSE 100 would rise to 6,150 by end-2011, up 6.5 percent from Wednesday's close of 5,772.99. It gained 9 percent in 2010.
A smaller sample of 13 saw the index reaching 6,300 by mid-2012 -- a 9.1 percent advance from the close on Wednesday.
"Equities still look attractive when compared to other global asset classes," said Angus Campbell, head of sales at London Capital Group, whose year-end target is in line with the median forecast of analysts.
"Overall UK companies remain cash-rich and should continue to invest in their businesses, further improving returns for investors."
Corporates have gone on the hunt for bargains, shrugging off broader concerns that the world economy is fragile, with global M&A deals totalling $1.38 trillion so far this year, up 43 percent over the same period last year, data from Thomson Reuters showed.
British financial software company Misys
The FTSE 100 <.FTSE> trades on one-year forward price-to-earnings of 9.7 times against a ten-year average of 14.1 times.
GLOBAL ECONOMIC WORRIES
Out of 20 common contributors, eight downgraded their end-year targets, while six upgraded theirs since the last poll in March. The biggest upgrade was by 450 points, and the biggest downgrade was by 600 points.
The UK benchmark index has slipped 2.2 percent since the beginning of the year, as investors have become increasingly risk-averse due to nervousness over the potential for Greece's sovereign debt crisis to spread.
"The Greek scenario is still likely to overshadow the markets with the potential for default hanging over us," said Martin Dobson, head of trading at Westhouse Securities.
"I would expect the market to rally if a satisfactory solution is achieved. However the chances for a long term solution remain very slim and short-term patches will only hold the market within the current trading range."
Although the expectation for the year-end close of 6,150 is 6.5 percent higher than Wednesday's close, it is only about 50 points above its high for the year of 6,105.77, which it hit back in February.
Since then, investors have been faced with uncertainty over the extent of global economic fallout from Japan's devastating earthquake in March, China's attempts to cool an overheating economy, and clear evidence of a slowdown in the U.S. economy.
In the UK, interest rates are expected to remain on hold at record lows of 0.5 percent until next year. The Bank of England's Monetary Policy Committee's latest meeting minutes judged the growth outlook had weakened, potentially leaving the door ajar for future quantitative easing programmes.
Some analysts, however, see rising interest rates and inflation in emerging markets heading into the second-half of 2011 as reason for equities to flourish.
"We think equities are poised for a stronger run over the next few months," Mislav Matejka, European equity strategist at JP Morgan, said.
"Many investors are starting to extrapolate current macro weakness, fearing further correction during the summer. However, we have always seen the key drivers behind our May-June consolidation call as temporary, and see current scepticism as an opportunity."
Matejka said he sees the usual suspect cyclicals as well as financials leading the market rebound.
(Editing by Jon Loades-Carter)
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