FTSE closes at near 2-1/2 year high on Fed QE boost

By David Brett

LONDON (BestGrowthStock) – Britain’s top shares closed at their highest in nearly 29 months on Thursday as investors responded bullishly to the U.S. Federal Reserve’s decision to pump more cheap money into the economy to boost flagging growth.

Financial stocks, led by Man Group (EMG.L: ) and mining and energy shares such as BHP Billiton (BLT.L: ) and BP (BP.L: ), surged higher as riskier assets around the world rose despite concerns the program could do more harm than good.

The FTSE 100 (.FTSE: ) closed up 113.82 points or 2 percent at 5,862.79, its highest since June 9, 2008, after the Fed committed to buy $600 billion in government bonds to support a struggling U.S. economy on Wednesday.

“The market’s reacted positively to QE and there’s a risk on environment, with data out of the U.S. better, the concerns about a slowdown are less pronounced,” said Phil Poole, global head of macro investment strategy at HSBC Global Asset Management.

There was good economic news from the United States on Thursday where non-farm productivity rose faster than expected in the third quarter, while unit labor costs fell.

New U.S. claims for unemployment benefits rose more than expected last week, underlining the persistent weakness in the jobs market which is threatening the recovery.

Financial stocks were top gainers. The world’s largest listed hedge fund firm Man Group (EMG.L: ), up 14.6 percent, reported upbeat first-half results.

Banks (.FTNMX8350: ) provided much of the index’s strength.


Miners (.FTNMX1770: ) rose in tandem with metals, which benefited as the dollar index (Read more about the global trade. ) (.DXY: ) fell to an 11-month low after the Fed’s announcement.

Anglo-Australian miner BHP Billiton’s (BLT.L: ) rose 6.6 percent after Canada blocked its $39 billion bid for Potash Corp (POT.TO: ).

Energy (.FTNMX0530: ) shares were higher helped by a 1.7 percent spike in the price of crude. BP (BP.L: ) added 1.3 percent. The oil major beat profit forecasts on Tuesday.

Elsewhere, Unilever (ULVR.L: ) jumped 6.3 percent after the consumer goods group’s third-quarter results.

On the downside, Wm Morrison Supermarkets (MRW.L: ) fell 3.9 percent after warning shoppers were likely to remain under pressure into the second half of 2011.

Next (NXT.L: ), which said it expected sluggish growth in the fourth quarter on Wednesday, shed 2.2 percent, while Marks & Spencer (MKS.L: ), which reports next week, was 1.6 percent lower.

Rolls Royce (RR.L: ) slipped 5 percent after Qantas Airways suspended flights of its Airbus A380 fleet after engine failure triggered an emergency landing in Singapore. Qantas A380s use Rolls-Royce Trent 900 engines.

Experian (EXPN.L: ) fell 1 percent as Credit Suisse downgraded the credit checking company.

The European Central Bank kept its main interest rate on hold at a record low of 1.0 percent for the 18th month running on Thursday, as expected by economists.

Momentum underlying the euro zone’s economic recovery remains positive but uncertainty about the outlook still prevails, European Central Bank President Jean-Claude Trichet said.

(Editing by Jon Loades-Carter)

FTSE closes at near 2-1/2 year high on Fed QE boost