FTSE-100 soars to second-highest close

LONDON

THE FTSE-100 index surged to its second-highest close yesterday amid further signs central banks will keep the printing presses rolling.

The London market rose 36.4 points to 6840.3, a 0.5% gain, as the US Federal Reserve said it was too soon to call time on its massive money-printing drive.

The only time the FTSE-100 has closed higher was in December 1999, when the dotcom boom drove the top tier to a record finish of 6930.2 points.

Fed chairman Ben Bernanke warned winding up its quantitative easing (QE) drive early would risk derailing recovery in the world’s biggest economy.

That boosted global stock markets in the US and Europe, as investors continue to be driven out of low-yielding government debt and into shares. But sterling was under pressure after worsethan-expected figures from the UK’s dominant retail sector, as official figures showed freezing weather drove retail sales 1.3% down in April.

Another call for more QE from outgoing Bank of England governor Sir Mervyn King also weighed on sterling, with a pound down to $1.50 and €1.17. But shares in

Lloyds Banking Group continued to rise yesterday after a positive update on its capital strength. Lloyds insisted it would not need additional help to meet regulatory demands for a bigger buffer against future financial shocks.

Shares closed up 1.43p at 62.96p, as it moves further away from the 61.2p barrier at which the Government said it would break even on its 2008 bailout. The stock is also at its highest point for two years amid expectations for the imminent sale of some of the taxpayer’s holding.

Royal Bank of Scotland shares were also higher after it told the Prudential Regulation Authority that it could meet its capital shortfall through existing means. The stock was 7.4p higher at 349.6p, while Barclays also gained 10.6p to 333.9p.

Other risers included Marks &

Spencer as the retailer rallied for a second successive session, despite results yesterday showing its lowest profits figure in four years. Shares were up 7.3p to 475.2p.

But energy giant SSE ended down 14p at 1662p despite reporting another bumper set of profit figures yesterday, with the surplus in its retail division up by a third to £410.1 million following the cold winter and a hike in prices.

Drinks company Britvic jumped 11% in the FTSE 250 Index after it reported a 50% surge in pre-tax profits to £37.5 million and said it would cut costs by another £30 million. Shares were 50.3p higher to 522.5p.

The biggest risers on the FTSE100 were Antofagasta, 38p ahead to 1002p, Barclays, up 10.6p to 333.9p, Astrazeneca, up 91p to 3485.5p, and Easyjet, 33p ahead to 1285p.

The biggest fallers on the FTSE-100 were BSkyB, down 19.5p to 779p, Morrisons, off 6.7p to 282.6p, Evraz, down 3.4p to 155.4p and CRH, 28p lower to 1414p.

NEW YORK

US stocks fell yesterday, with the SP 500 posting its biggest decline in three weeks, after minutes from the latest US Federal Reserve meeting showed some officials were open to tapering large-scale asset purchases as early as at the June meeting.

Trading was volatile – the Dow and the SP indexes both rose more than 1% during the morning, but fell more than 1% in the afternoon.

The minutes followed comments from Chairman Ben Bernanke, who said the Fed could decide to scale back the pace of bond purchases at one of the “next few meetings” if the economic recovery looked set to maintain forward momentum.

The comments were a blow to a market that had accelerated after Mr Bernanke said the central bank needed to see further signs of traction in the economy before it tapered stimulus.

“This is a very sensitive market and particularly sensitive to any notion that tapering will come too soon,” said Quincy Krosby, market strategist at Prudential Financial in New York.

“No-one wants to be selling if the data reaches the point when the Fed begins to specifically talk about tapering. The market doesn’t wait for the Fed to move. It will move before. That’s how it operates.”

Krosby said Bernanke went offscript and in his effort to be transparent, “he confused the market”.

The Dow Jones industrial average was down 80.41 points, or 0.52%, at 15,307.17. The SP 500 Index fell 13.81 points, or 0.83%, at 1655.35. The Nasdaq Composite lost 38.82 points, or 1.11%, at 3463.30.