Bank’s decision to hold rates helps FTSE rise - London Report

THE BANK of England’s decision yesterday to keep interest rates at record low levels contributed to rises in the blue-chip FTSE 100 index. A continuing surge in energy and mining shares also helped the index to maintain a run of rises.

The FTSE 100 ended 0.6 per cent stronger at 6,374.82 points, outperforming major European stock indexes.

The pan-European FTSEurofirst 300 index, France’s CAC and Germany’s DAX were all up 0.2 per cent.

BoE policymakers voted 8-1 to keep interest rates at 0.5 per cent. The central bank also said inflation would stay below one per cent until spring 2016. It was zero in August.

“There is some relief that the BoE is not in a hurry to raise interest rates, especially because the central bank sees inflation rising too slowly to its target level,” said Keith Bowman, equity analyst at Hargreaves Lansdown.

“The UK stock market is also getting support from a rally in some commodity stocks.”

The British oil and gas index rose 0.7 per cent, tracking a rise in fuel prices. The mining index advanced 1.3 per cent.

The mining company Fresnillo rose 4.2 per cent to 704.50p, the top gainer in the FTSE 100 index, after HSBC raised its target price for the stock to 810p from 760p.

Global diversified mining company BHP Billiton was up 3.3 per cent. However, mining and trading giant Glencore was one of the biggest fallers, down 2.7 per cent, after downbeat comments from brokers.

Canaccord Genuity cut its target price on the stock to 190p from 220p.

EasyJet rose 1.9 per cent and British Airways and Iberia-owner International Consolidated Airlines Group one per cent.

Analysts cited a boost from Air-France-KLM’s report that total group traffic for September 2015 was up 22 per cent.

Retail giant Tesco rose 2.4 per cent.

A number of shares going ex-dividend also weighed on the index, with B&Q owner Kingfisher falling 0.5 per cent.

Banking shares came under pressure after Deutsche Bank warned of a big third-quarter loss.

Shares in Barclays endured a roller-coaster ride throughout the day, but ended in negative territory, down 0.4 per cent.