ECB commitments boost markets
Moves across Europe to bolster the region’s banks and economies sparked a second day of strong gains for shares in London.
The FTSE 100 Index in London surged by nearly 4% or 189.1 points to 5291.3 as the European Central Bank said it would offer new emergency loans to banks to help steady them through the region’s deepening debt crisis.
This followed a move earlier by the Bank of England to add £75bn to its quantitative easing (QE) programme to head off a possible UK double-dip recession.
David Jones, chief market strategist at IG Index said: “The last 12 months has demonstrated time and time again that markets react favourably to central bank stimulation and today has been no different.”
Other markets also made gains with Wall Street’s Dow Jones Industrial Average ahead 0.8% and the Dax in Germany and France’s Cac-40 up by 3.4% and 3.1% respectively.
The pound fell after the QE decision to 1.147 against the euro and to 1.539 versus the US dollar.
Hopes that leaders will act to support struggling banks prompted a surge in riskier stocks, such as the heavily weighted mining sector.
Chilean miner Antofagasta surged 96.5p to 1042p, Eurasian Natural Resources lifted 54p to 611.5p and Kazakhmys added 65p to 847.5p.
They were joined on the risers board by a clutch of financial stocks, with insurer Prudential 62p higher at 590p, Lloyds Banking Group up 2.9p at 35.9p and Barclays 12.4p stronger at 167.9p.
There was relief in the retail sector after scheduled updates from Halfords, Greggs and Ted Baker spared investors further misery, following the profits warning from Mothercare yesterday.
Investors in car parts firm Halfords were reassured by the company’s latest statement, which contained a 2.8% drop in like-for-like sales in the 13 weeks to September 30 but no new downgrade to profit forecasts. Halfords rose by 8% or 23p to 303p.
Greggs was higher after same-store sales accelerated to 0.8% in the third quarter. Shares jumped 22.1p to 483.2p.
Fashion retailer Ted Baker added 3p to 691p following a 13% rise in half-year profits, although some of the shine was lost by its admission that recent trading had been affected by the recent hot weather.
Mothercare shares followed yesterday’s 42% slump with a further decline, falling 0.4p to 179.6p.
Outsourcing firm Mouchel bucked the rising trend as it revealed a £4.3m accounting blunder and said profits would be hit by a similar amount due to shortfalls on other contracts.
Shares crashed 34% or 10.5p to 20.5p well below the value of bids from rival support services firms Costain and Interserve, both of which it rebuffed earlier this year.
The biggest Footsie risers were Prudential up 62p at 590p, IMI ahead 78p at 759p, GKN up 17.1p at 182.4p and Antofagasta ahead 96.5p at 1042p.
The biggest Footsie fallers were Man Group down 2p at 162.6p, Admiral off 4p at 1259p, Autonomy down 4p at 2546p and Next off 1p at 2446p.
