BRITAIN’S benchmark share index closed at its highest level in nearly two weeks yesterday, as hopes of fresh central bank stimulus measures lifted equity markets, although traders said the overall weak economic outlook would limit any future gains.
The blue-chip FTSE 100 ended up 56.68 points, or one per cent, at 5,685.77 points – its best closing level since finishing at 5,692.63 points on 5 July, and recovering from two consecutive days of slight losses.
Expectations that central banks such as the US Federal Reserve or Bank of England might inject fresh liquidity – via a process known as quantitative easing (QE) – to fight the weak global economy, lifted the FTSE and other global equity markets.
Minutes from a 4-5 July meeting of the Bank of England’s Monetary Policy Committee showed that its policymakers had discussed a possible interest rate cut and larger asset purchases.
However, many traders remained cautious, with worries over the weak economy highlighted by data showing a bigger-than-forecast rise in the UK jobless claimant count in June.
The FTSE rally was mainly driven by gains in heavyweight defensive stocks, such as British American Tobacco and supermarket group Tesco, often favoured in times of economic uncertainty for their stable profits and high dividends – again indicating a lack of conviction in the broader rally.
Hargreaves Lansdown topped the FTSE 100 leaderboard, up by around 4.2 per cent.