FTSE gains on hope of more banking stimulus measures

Britain’s top shares rose yesterday as hopes that governments around the world would take steps to bolster economic recovery fuelled investor optimism.

Meanwhile, bullish broker comment helped lift Petrofac and Weir Group, while Prudential, Autonomy and BP were hit by broker downgrades.

The FTSE 100 closed up 14.79 points, or 0.3 per cent, at 5,672.40. It closed 4.52 points or 0.1 per cent lower on Friday at 5,657.61.

In the US, economists overwhelmingly expect the Federal Reserve to embark on another round of quantitative easing this year in an effort to prop up a struggling economy plagued by high unemployment.

Late in September, economists polled by Reuters said the chances of the Bank of England extending its quantitative easing scheme are on the rise.

“Governments need to be seen to be proactive whether the threat of a double-dip recession is real or not,” Jimmy Yates, head of equities at CMC Markets, said.

“Investors look to be pricing in further QE, particularly in the US If that doesn’t happen in November then we could see a sharp retreat from current levels.”

The FTSE 100 is up almost 900 points, or 19 per cent, since its 2010 closing low on 1 July.

Investors were also awaiting third-quarter US corporate earnings, with figures due among others this week from Intel on Tuesday and JPMorgan Chase on Wednesday.

“From the point of view of the equity market, (quantitative easing) would mean more stimulus ... and the markets might just read that as being good news for earnings or good news for growth,” Mike Lenhoff, chief strategist at Brewin Dolphin, said.

Petrofac rose 2.5 per cent, after the oil and gas services company won a contract worth $250m with the government of Sharjah in the UAE.

The stock was also aided by a price target rise from Evolution Securities following a Syrian site visit.

Other broker comments were behind a number of individual equities moves, traders said.

Weir Group gained 2.4 per cent after UBS upgraded its target for the engineering firm to 1,700p from 1,400p, while repeating its “buy” rating.

Ladbrokes, rose for a seventh day, increasing 2.3 per cent to 141.1p. The bookmaker said third-quarter operating profit more than doubled, boosted by betting on soccer’s World Cup and better win rates at its gambling machines.

Smiths Group, rose 1.5 per cent to 1,255p, erasing two days of losses. UBS increased its price estimate on the shares by 11 per cent to 1,550p.

BT Group, fell 1.4 per cent to 146.9p, dropping for a second day. after Bernstein cut its rating to “underperform” from “market perform.”

Prudential slid 1.3 per cent to 628.5p for a second day. JPMorgan Chase cut its rating to “underweight” from “neutral,” saying “we don’t see much upside in the current share price.”

BP slipped 0.8 per cent to 432.35p as Royal Bank of Scotland cut its recommendation to “hold” from “buy.”

Autonomy slumped 2.3 per cent to 1,485p, dropping for a fourth day. The software company was cut to “hold” from “buy” at Deutsche Bank .