London shares posted healthy gains today as investors showed few nerves ahead of key announcements from central banks in the UK and US later this week.
The FTSE 100 Index jumped 72.9 points or 1.4% to 5405.3, recovering all of Friday’s deficit when weaker-than-expected US non-farm payroll figures offset Royal Bank of Scotland’s decent contribution to the week’s banking results.
Miners were among today’s risers after commodity prices rose on expectations of further weakness in the US dollar.
Friday’s job figures offered further indication that the US economic recovery was grinding to a halt, adding to expectations that the Federal Reserve may announce further stimulus measures, possibly as soon as Tuesday.
While a no-change decision is still the most likely outcome, the Fed is likely to indicate in its statement that the US economy has lost momentum.
The Bank of England, which publishes its quarterly inflation report on Wednesday, will also stoke fears about the UK economic recovery when it will predict a mix of slower growth and higher inflation over the next two years.
As well as miners, insurers were doing well after City firms including Panmure Gordon and Bank of America Merrill Lynch upgraded their guidance on Aviva in the wake of the company’s interim results last week.
Aviva shares extended their recent rally with a gain of 8.6p to 390.3p, while Prudential rose 15.5p to 587p ahead of its own figures on Thursday.
It is expected to announce a sharp hike in its dividend but will reject calls for a strategic revamp following its failure to land AIG arm AIA.
Legal & General provided the sector’s biggest rise with a gain of 3.25p to 90.35p and Barclays recovered from last week’s fears over revenues at its investment banking arm to improve 8.95p to 333.55p.
Beleaguered social housing firm Connaught continued to suffer turmoil after reports said shareholders were likely to be wiped out in a debt-for-equity swap that will hand control to lenders.
Shares in the business were down another 26% or 3.95p to 11.55p after falling 46% on Friday following its warning that it faced a material full-year loss.