FTSE rises again as Fed remarks help lift mood

BRITAIN’S top share index rose yesterday after several US central bankers offered reassuring comments about their stimulus programme, helping the market further off six-month lows.

The FTSE 100 closed up 77.92 points, or 1.3 per cent, at 6,243.40, with only nine stocks in negative territory.

The index extended modest morning gains in afternoon trade, as encouraging data from the United States and comments from Federal Reserve officials helped lift US stocks.

Two voting members of the Fed said policy was likely to remain accommodative and played down chairman Ben Bernanke’s comments that stimulus withdrawal could happen later this year.

“The return to markets going positive this week is simply because markets overreacted to the initial comments from Bernanke, as if quantitative easing was ending in September. It isn’t, and the rhetoric from other Fed members has said exactly that,” said Lorne Baring, managing director of B Capital.

The FTSE 100 had tumbled 16 per cent in a month to its lowest levels since January after Bernanke first hinted that stimulus might be withdrawn this year, but is up 2.1 per cent this week.

Baring said he owned the FTSE 100 because of its global exposure and the possibility of further monetary support once new Bank of England governor Mark Carney takes up his post.

That global exposure was evident in the performance of miners, who gained 1.2 per cent to bounce off four-year lows, helped by a recovery in metals prices.

The top gainer in the FTSE 100 was WPP, the world’s biggest advertising agency, up 4.5 per cent after being added to Bank of America/Merill Lynch’s “most wanted” list.

Positive broker comment also helped Smiths Group, up 3.8 per cent with traders citing a UBS upgrade of the stock to “buy” from “neutral” as being behind the move.

Banks underperformed after the European Union agreed on how to share the costs of future bank failures among investors and wealthy savers, with Royal Bank of Scotland and Barclays down 1.6 per cent and 0.9 per cent respectively.

“As part of the deal the implementation of a deposit levy is also likely to raise banks’ costs and thus impact profitability which has pushed prices lower,” Michael Hewson, senior analyst at CMC Markets, said yesterday in a trading note.