Riskier asset moves help FTSE defy gravity

LONDON

THE London market continued to defy gravity yesterday as the FTSE 100 Index closed at its fourth-highest ever level.

The blue-chip index added 48.2 points, or 0.7%, to close at 6803.9, a level not seen since December 1999, when the dotcom boom drove it to a record 6930.2.

A recovery in mining stocks added to central bank-induced euphoria, as investors moved out of government debt and into riskier assets such as equities.

The FTSE 100 surged past landmark levels set in 2007 and 2000, as comments from the US Federal Reserve suggested the world’s biggest economy may yet see more quantitative easing.

The London market was also boosted by strong US retail sales figures pointing to more optimism in the consumer sector.

On Wall Street, the Dow Jones Industrial Average gained, as did the Dax in Frankfurt and the Cac 40 in Paris.

But the pound fell to a sevenweek low against the dollar and struggled against the euro after weaker-than-expected UK inflation raised the prospect of more quantitative easing by the Bank of England.

The pound was worth $1.52 dollars and €1.17.

Retailer Marks & Spencer was among the risers, gaining about 6%, even though annual profits fell to their lowest level in four years due to a slump in clothing sales. Underlying pre-tax profits for 2012/13 were £665.2 million, in line with market expectations. Shares were 27.4p higher at 467.9p.

Outsourcing giant Capita made strong gains in the blue-chip index after striking a 10-year £1.2bn deal with mobile phone group O2 to run and manage its call centres. Capita’s shares surged 6%, or 56p, to 1005p. Home emergency business

Homeserve was the biggest winner on the FTSE 250, despite setting aside £6m to cover a potential mis-selling fine from regulators. Shares gained 10% or 23.2p to 250.2p on investor relief that the boiler repair firm does not expect a bigger penalty from the Financial Conduct Authority for a mis-selling scandal.

Mobile phone giant Vodafone gained on the FTSE 100 despite reporting its first drop in annual revenues for seven years as Europe’s economic woes weigh.

Sales of £44.4bn for the year to March 31 were 4.2% lower than a year ago, but shares in the company edged up 2.3p to 199.9p.

Security company G4S also made ground after it announced the departure of chief executive Nick Buckles. Shares closed up 0.9p at 251.9p.

P&O cruise company Carnival was the biggest faller on the FTSE 100, down 6% or 143p to 2267p, following a profits warning.

The biggest risers on the FTSE 100 were Polymetal International up 52p to 669p, Marks & Spencer, Capita and Burberry ahead 78p to 1541p.

The biggest fallers were Carnival, Arm Holdings down 31p to 1065p, Royal Bank of Scotland down 9.7p to 342.2p and British

Land down 15p to 643p.

NEW YORK

US stocks rose yesterday, with the Dow and the SP 500 closing at new all-time highs as Federal Reserve officials’ comments eased some concerns that the central bank could start reducing its stimulus programme.

Dow component Home Depot gave the market a lift after the world’s largest home improvement chain raised its profit outlook, driving its stock to a record intraday high.

JPMorgan also bolstered the Dow, rising more than 1% to a 52week high after the bank’s chief executive won a vote of confidence from shareholders.

Stocks extended gains in afternoon trade after New York Fed President William Dudley said he cannot be sure whether policymakers will next reduce or increase the amountof purchases, due to the “uncertain” economic outlook. Earlier, James Bullard, president of the Federal Reserve Bank of St Louis, had urged the European Central Bank to consider employing a US-style quantitative easing programme to counter slowing inflation and recession in the eurozone.

The Fed’s $85 billion-per-month bond buying programme has played a significant role in the market’s rally and investors have recently become nervous over when the central bank will alter or halt the programme.

The Dow Jones industrial average gained 52.30 points, or 0.34%, to end at a record 15,387.58. The Standard & Poor’s 500 Index added 2.87 points, or 0.17%, to finish at a record 1669.16. The Nasdaq Composite I ndex advanced 5.69 points, or 0.16%, to close at 3502.12, its highest close since October 2000.