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Banks and retailers lead cautious London rally

The London markets opened up this morning, with the FTSE 100 rising 39 points or 0.73% to 5357 by mid morning, as markets awaited the Bank of England’s monthly announcement on interest rates and quantitative easing.

the FTSE 250 index of mid sized companies was up 105 points to 10425, while hopes that the Bank of England would today signal the beginning of a second round of quantitative easing sent British gilt futures higher, outperforming German Bunds.

European stocks continued their rally, extending the previous session’s rebound, with investors swooping on recently battered banking shares. The FTSEurofirst 300 index of top European shares was up with BNP Paribas, Societe Generale and Banco Santander leading the rally.

The London rally was led by the banks and mining group Glencore, despite news that dozens of its employees have died on duty. Lloyds was up 4.1% to 34p, Royal Bank of Scotalnd up 5.7% to 24p, and Barclays 3.8% to 167p, while retailers Morrisons and Marks & Spencer also featured amongst the top gainers.

Yusuf Heusen, sales trader at IG Index, commented:

“With many hoping for stimulus plans to be tabled
by at least one central bank soon, plus an imminent job creation
announcement from President Obama, it’s perhaps no surprise that the
cautiously confident mood is prevailing.”
“The ECB and BoE rate verdicts aren’t expected to throw up any
surprises, although it’s the detail that counts. Any suggestion in the
minutes two weeks down the line of a bias towards increasing the asset
purchase programme would be well received by stocks.”

Among the mid cap stocks, the top risers included IT group Logica, up 8% to 89p and Dixons Retail, up 6% to 11p on the back of a less bad than feared trading statement, were among the top risers.

The Bank of England will make its announcement at mid day, while the European Central Bank will put out its decision on interest rates at 12.45pm UK time. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds