Increased optimism that central bankers will pull the trigger on further emergency support measures ensured a robust performance on the London market today.
The FTSE 100 Index closed 46.9 points higher at 5758.4 following hints on Friday from Federal Reserve chairman Ben Bernanke that more quantitative easing was an option.
Mr Bernanke’s speech was followed by figures today showing a contraction in China’s manufacturing activity – boosting expectations of more stimulus in the world’s second largest economy.
And with expectations mounting that the European Central Bank will finally unveil measures of its own for the beleaguered eurozone on Thursday, traders saw their appetite for risk return.
The pound was up against the US dollar and euro at 1.58 and 1.26 respectively after a purchasing managers’ index for the manufacturing sector unexpectedly rebounded, suggesting an easing of the sector’s downturn.
The hoped-for boost from central bankers ensured commodity-based stocks were at the forefront of the improvement in London, with silver miner Fresnillo up by 4% or 66p to 1627p and Kazakhmys 17p higher at 610p.
Commodities trader Glencore had a rocky session, edging out of the red to stand 3.1p higher at 388.2p amid expectations that its mega merger with Xstrata will fail to win the support of shareholders on Friday.
Supermarket Morrisons was a top flight casualty as the City took a pessimistic view of half-year results on Thursday. With the company feeling the pressure of discounting by rivals, profits for the six months to July 31 are due to fall 2% to £434m (€547m). Shares were 1.8p lower at 278.2p.
While there was little in the way of corporate news to stimulate markets, broker notes had a bearing on the performance of a number of stocks.
Insurer Admiral, which owns the price comparison website Confused, was down 3% or 36p to 1150p after Credit Suisse questioned whether there was further scope for growth in the stock after a recent strong run.
Downgrading its target price to 1250p a share, the City firm also said near-term conditions were likely to be constrained by pressure on vehicle count growth and industry pricing trends.
It was a similar story at chip designer Arm Holdings after Deutsche Bank said it expected the Cambridge-based company’s recently strong earnings per share growth to slow to the mid-teens. Shares were 14.5p lower at 559.5p.
Outside the top flight, shares in dating agency Cupid were nearly 2% lower after pre-tax profits fell 5% to £3.7m (€4.6m) on the back of slower growth in established markets such as the UK and Australia. Shares in the company, which owns Cupid.com and BeNaughty.com, fell 3p to 204p.
The biggest Footsie risers were Fresnillo up 66p at 1627p, Kazakhmys ahead 17p at 610p, Vedanta Resources up 24.5p at 892p and Sage Group ahead 7.3p at 303.5p.
The biggest Footsie fallers were Admiral down 36p at 1150p, ARM Holdings off 14.5p at 559.5p, Aggreko down 23p at 2337p and Morrisons off 1.8p at 278.2p.