Banks, commods lead FTSE up 0.8 percent

LONDON - Britain’s top share index rose 0.8 percent by Wednesday midday, as commodity stocks and banks led a broad-based rally, underpinned by the minutes showing unanimous vote from the BoE to retain its easy monetary policy.



By (Reuters)

Published: Wed 23 Dec 2009, 6:51 PM

Last updated: Thu 2 Apr 2015, 3:49 AM

At 1145 GMT, the FTSE 100 was up 44.97 points at 5,373.63, after rising 2.5 percent in the previous two sessions, albeit in thin pre-Christmas trade.

“There’s a few economic numbers out in the U.S. later but I think there’s enough seasonal sentiment to push on and possibly close at a high for the year on Christmas Eve,” said Jimmy Yates, head of equities at CMC Markets.

The UK blue chip index has surged about 55 percent from a six-year low hit in March but is still 0.8 percent below its level of mid-September 2008 before the collapse of Lehman Brothers.

Banks extended Tuesday’s gains, with Barclays, HSBC, Lloyds Banking Group and Standard Chartered up 0.9 to 2.1 percent.

Energy stocks were boosted by the hardening price of crude oil. BP, Royal Dutch Shell and BG Group put on 1.1 to 1.2 percent.

Mining stocks rose against a backdrop of firmer metals prices. Eurasian Natural Resources, Lonmin, Rio Tinto and Vedanta Resources added 1.4 to 2.9 percent.

Easy monetary policy

All nine members of the Bank of England’s (BoE) Monetary Policy Committee voted to keep interest rates at a record low of 0.5 percent and maintain the 200 billion pound ($320.2 billion) asset buying programme in December, as expected.

The Daily Mail reported, citing authoritative sources, that Britain’s central bank is prepared to expand its quantitative easing programme to ensure economic recovery is sustained.

“I wouldn’t be surprised if we see further action. The country’s not yet out of recession and with an election looming the government will need to be seen to be doing something,” CMC’s Yates said.

The British Bankers’ Association reported the number of home purchase loans approved by British banks in November more than doubled compared with a year ago.

Britain’s service sector growth slowed to 0.1 percent in October from a slightly upwardly revised 0.5 percent in September after a fall in distribution services output.

In the United States, new home sales data for November, due at 1500 GMT, will be a focus for investors.

Defensive issues were also swept higher by a fairly broad-based pre-Christmas rally.

Pharmaceutical stocks GlaxoSmithKline and Shire each rose 0.4, with British American Tobacco and Imperial Tobacco up 2.2 and 0.4 percent.


More news from Business