London close: ECB speculation, BoE minutes spark surge in UK stocks

Expectations for continued loose monetary policy in the UK and hopes for government bond purchases in the Eurozone gave stock markets a big lift on Wednesday, with London's FTSE 100 rising to its highest in nearly seven weeks.

Well-received trading updates from Pearson and SABMiller, and strong gains from oil and gas stocks, pushed the FTSE 100 up 1.6% to 6,728 by the close. The index has not closed above the 6,700 mark since 5 December.

Sentiment was boosted by speculation that the European Central Bank (ECB) will implement full-blown quantitative easing (QE) in an effort to boost growth and lift the Eurozone out of deflation.

Gains were extended by an apparent leaked report from the ECB that it is considering a QE programme of €50bn per month for at least 12 months, more than some analysts had expected.

"The hours are being counted down to the ECB meeting and the rumour mill is going into overdrive," said analyst Chris Beauchamp from IG.

However, Beauchamp said the increased optimism that ECB president Mario Draghi will make a big announcement on Thursday just "increases the chance of disappointment". He said: "It might be the ECB’s last chance to regain control of the situation, so Mr Draghi has to make every shot count."

The Bank of England revealed on Wednesday that its vote this month to keep the Bank Rate at the record-low level of 0.5% was unanimous, surprising investors as two previously dissenting members - Martin Weale and Ian McCafferty - changed their minds after calling for a rate hike for the previous five months.

The minutes "may very well fuel belief that the Bank of England will not be raising interest rates until 2016", said economist Howard Archer from IHS Global Insight.

Pearson impresses, oil and gas stocks gain

Pearson, the Financial Times and education publisher, rose strongly after guiding to higher profits in 2015 as it maintained its forecast for results last year. Adjusted earnings per share should rise to 75p-80p this year, compared with an estimated 66p in 2014.

Oil and gas stocks were on the rise as crude prices jumped 3% on the back of speculation that US drilling may slow, easing the supply glut which has sent prices to their lowest in over five and a half years. BHP Billiton, the biggest overseas investor in US shale, said it would reduce the number of its US onshore rigs by June in response to lower prices. Tullow, BP and BG Group advanced.

Despite more difficult trading conditions in China and North America, SABMiller’s shares rose after the drinks group registered a 4% increase in group net producer revenue in the third quarter.

However, Sports Direct was a heavy faller after the news that founder Mike Ashley had sold £117-worth of shares in the sports retailer equal to a 2.6% stake.

Takeover target Afren also dropped on after the news that it has been reviewing its “capital structure, liquidity and funding requirements” and looking at its cost base and spending plans for 2015 given the recent rapid plunge in oil prices. Afren on Monday extended a ‘put up or shut up’ deadline for potential bidder Seplat to make an offer until 30 January.

Market Movers
techMARK 3,063.09 +1.08%
FTSE 100 6,728.04 +1.63%
FTSE 250 16,253.31 +0.79%

FTSE 100 - Risers
Pearson (PSON) 1,296.00p +4.85%
BG Group (BG.) 885.90p +4.31%
Tullow Oil (TLW) 384.50p +3.92%
Aberdeen Asset Management (ADN) 427.80p +3.78%
Vodafone Group (VOD) 238.15p +3.54%
BP (BP.) 426.00p +3.35%
Barratt Developments (BDEV) 440.30p +3.04%
ARM Holdings (ARM) 1,059.00p +3.02%
SABMiller (SAB) 3,442.00p +2.96%
Sainsbury (J) (SBRY) 264.00p +2.84%

FTSE 100 - Fallers
Sports Direct International (SPD) 716.50p -5.79%
Intertek Group (ITRK) 2,297.00p -3.69%
Associated British Foods (ABF) 2,998.00p -1.70%
Babcock International Group (BAB) 1,016.00p -1.17%
Randgold Resources Ltd. (RRS) 5,525.00p -0.63%
Experian (EXPN) 1,162.00p -0.60%
Dixons Carphone (DC.) 439.80p -0.54%
easyJet (EZJ) 1,647.00p -0.42%
Severn Trent (SVT) 2,135.00p -0.14%
Royal Bank of Scotland Group (RBS) 380.20p -0.08%

FTSE 250 - Risers
FirstGroup (FGP) 109.10p +6.96%
Man Group (EMG) 172.10p +6.56%
Nostrum Oil & Gas (NOG) 505.00p +6.05%
Allied Minds (ALM) 420.00p +4.71%
Premier Oil (PMO) 149.10p +4.63%
Pets at Home Group (PETS) 210.00p +3.50%
Ophir Energy (OPHR) 129.70p +3.18%
Jardine Lloyd Thompson Group (JLT) 951.00p +3.15%
Amec Foster Wheeler (AMFW) 814.50p +3.04%
Brown (N.) Group (BWNG) 423.10p +2.94%

FTSE 250 - Fallers
Afren (AFR) 21.00p -18.57%
Poundland Group (PLND) 350.00p -3.63%
JD Sports Fashion (JD.) 488.00p -3.37%
Domino's Pizza Group (DOM) 676.50p -3.15%
UDG Healthcare Public Limited Company (UDG) 390.00p -2.89%
Wetherspoon (J.D.) (JDW) 801.00p -2.20%
Grainger (GRI) 189.00p -2.07%
Enterprise Inns (ETI) 110.00p -1.70%
COLT Group SA (COLT) 130.00p -1.59%
Millennium & Copthorne Hotels (MLC) 574.50p -1.54%