Rates news welcomed by FTSE investors

The London market built on modest gains today as investors welcomed hints that UK interest rates may not go much higher.

The FTSE 100 Index lifted 14.3 points higher to 4622.7 by mid-morning after the Bank of England said its Monetary Policy Committee (MPC) voted unanimously to hold rates at 4.75% earlier this month.

Committee members voiced concern that UK house prices could move downward and admitted they may have under-estimated the potential for a knock-on impact on consumption.

The news soothed fears of further rate rises and injected extra lift into a market rendered cautious by last night’s Federal Reserve decision to boost US rates by a quarter point.

On the corporate front in London, Vodafone was third in the Footsie risers after announcing plans to launch third generation mobile phones before Christmas.

The Newbury-based mobile phone group rung up a 2%, or 3p, gain to 133.25p after saying it would start selling 10 handset models in November.

Shares in oil group Shell were second in the Footsie fallers, down 11p at 421.25p, after investors gave a cool reception to its plans to invest $45bn (€36.8bn) and make major disposals after its reserves crisis earlier this year.

Rival BP was unchanged at 538p despite a rise above $47 in the cost of a barrel of US light crude.

Aerospace and defence group Smiths was high in the risers with a 12p gain to 736.5p after saying trading conditions appeared more positive than for some years, despite flat final profits.

Group 4 Securicor topped the FTSE 250, lifting 5p to 120p, after revealing it was on course to make the £30m (€43.9m) of annual cost savings it promised at its merger.

But housebuilder Barratt Developments lost 9p to 592p after saying it expected house selling prices to rise “much less rapidly” in the coming year.