Rate-cut hopes keep Footsie rising
SHARES enjoyed their third successive daily rise after aggressive rate cuts in the U.S. raised expectations of similar moves on this side of the Atlantic.
The FTSE 100 index rose 49.1 points to 4291.6 on expectations that the Bank of England would next week lower the cost of borrowing after the Federal Reserve trimmed its rate from 1.5 per cent to 1 per cent on Wednesday.
Hopes that concerted action by central banks and governments would drag the world economy back from a savage recession lifted global markets.
Insurer Old Mutual led the Footsie’s charge, gaining 9bp to 60p on talk that it could bolster its financial position with a rights issue, allowing it to cut debts.
The insurance sector was also lifted by figures from Standard Life, the latest in a string of insurers to report robust figures, allaying fears of a meltdown in the sector.
Norwich Union owner Aviva gained 26p to 350p and Prudential rose 12bp to 307dp, but RSA Insurance fell 3bp to 130p after analysts at Royal Bank of Scotland cut their recommendatoin on the insurer from hold to sell.
There was a lot of switching between stocks in the sector and Admiral ended the day as the biggest blue-chip faller, down 190p to 900p.
A big rise in profits at Royal Dutch Shell overshadowed a drop in the price of oil below $65 a barrel on worries about the U.S. economy.
Tullow Oil rose 9fp to 473p, Cairn Energy was up 204p to 1550p and BG up 63p to 866p, though BP slipped 11bp to 494dp. Hopes that the international economy would benefit from rate cuts lifted the mining sector.
It was also helped by a better-than-expected production report from Kazakhmys, up 32fp to 301bp.
Other miners were pulled up in its wake, including Rio Tinto, up 89p to 2766p, BHP Billiton, 48p ahead at 1008p, Antofagasta, up 29fp to 367bp and Xstrata up 73p to 960p.
Punch Taverns was 17fp brighter at 147p after an upbeat note from Morgan Stanley.
Enterprise Inns gained 1bp to 96fp and Whitbread 16p to 868p.
Recruitment firm Hays gained 7fp to 70p after an upgrade from Merrill Lynch.
Hopes that the strike at Boeing could be coming to an end lifted aerospace engineer Senior 3fp to 49dp and specialist tool maker Hampson Industries, up 7p to 108bp. Hampson also rose on news of a new contract to supply equipment used for the Airbus A350 programme.