Footsie rises as QE talk cheers investors

Thursday 21 June 2012

FRESH hopes that the Bank of England will launch another round of stimulus measures lifted London's leading shares index yesterday.

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The FTSE-100 rose 35.98 points to 5622.29 after minutes from the Bank revealed that policymakers failed to back more quantitative easing by the slimmest of margins last month.

It followed yesterday's news that inflation fell to 2.8% in May, giving the Bank more leeway to act, and boosted hopes of more money printing next month.

Meanwhile, traders were waiting for the US Federal Reserve's latest announcement amid speculation that policymakers would signal additional stimulus measures.Pressure on central banks to intervene is growing amid mounting evidence that the eurozone debt crisis is affecting major economies, including the US and China.Greece finally formed a coalition government but is still expected to seek to renegotiate its bailout package, leading to further uncertainty about its position in the euro.The Bank of England yesterday allotted the full £5 billion of six-month funding offered to banks under the "extended collateral term repo" facility unveiled by Governor Sir Mervyn King at his speech to the City of London at the Mansion House last week.However, the fact that the funds cleared at the mini- mum 25-basis-point spread above base rate was viewed as signalling relatively muted demand for this additional liquidity, which is aimed at supporting lending to the wider UK economy. World markets generally trod water after making strong gains yesterday.Miners and financial stocks were among the biggest risers on the back of the stimulus speculation, with Polymetal International ahead 4%, or 33.5p, at 940p, and Hargreaves Lansdown up 5%, or 22.6p, at 518.5p.In a quiet session for corporate news, ITV shares were 3% higher as investors continued to speculate about possible private equity interest in the broadcaster and Panmure Gordon stockbrokers issued a note reiterating its buy rating.The shares were 2.3p higher at 76.5p.Meanwhile, Premier Inn and Costa coffee group Whitbread continued its ascent after a strong trading update triggered a 6% rise in its share price on Tuesday. It was up another 92p to 2059p yesterday.

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Footsie rises as QE talk cheers investors

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