Five-week high for the FTSE as bulls take over

BRITAIN’S top share index hit a five-week closing high yesterday, bolstered by mining stocks, after the US Federal Reserve chairman Ben Bernanke signalled a commitment to monetary stimulus for the foreseeable future.

The FTSE 100 ended up 38.45 points, or 0.6 per cent, at 6,543.41, its highest close since 4 June, having recouped more than half of the drop which began in late May on Bernanke’s initial suggestion that diminished stimulus could come as early as this year.

But Bernanke on Wednesday said that the overall message coming from the central bank was that “a highly accommodative policy is needed for the foreseeable future”

“It really has given markets a sign to shift higher – tapering, we don’t have to worry about it for quite a while,” said IG market analyst Chris Beauchamp. “I think we’re going to move higher but it might be the case that we’re going to drift for a couple of days (after recent gains),” he said.

Miners were the biggest risers by some margin, dominating the FTSE 100 leaderboard, as copper prices hit a near one-month high on the back of the Fed signals.

Technical charts indicated scope for optimism on the UK benchmark, with the index holding above its 50-day moving average, now at 6,464.

“We remain bullish – the next target is 6,605,” Shai Heffetz, managing director of spreadbetting and CFD provider InterTrader, said.

Associated British Foods also managed strong gains, up 5.1 per cent, driven by a strong third-quarter performance at its discount clothing chain Primark, prompting Panmure Gordon to raise its recommendation on the firm to “buy” from “hold”.

Trading volume in AB Foods was robust, at more than twice its 90-day daily average.

But Serco and G4S were left nursing respective falls of 7.9 per cent and 5.6 per cent after Britain placed all contracts held by the outsourcing firms under review after an audit showed they charged for tagging criminals who were either dead, in prison or never tagged in the first place.

Trading volumes for the pair stood at around five and two and a half times their 90-day daily averages respectively, against the FTSE 100 on 87 per cent.