London midday: UK stocks at three-week high on hopes for central bank support

UK stocks are trading at their highest levels in over three weeks as speculation grows about further potential stimulus in the Eurozone and continued loose monetary policy in the UK.

London’s FTSE 100 was up 0.7% at 6,666 by midday, after closing at 6,620.10 on Tuesday, its highest finish since 29 December 2014.

Gains were extended mid-morning after the Bank of England revealed that the vote this month to keep the Bank Rate at the record-low level of 0.5% was unanimous again as two previously dissenting members - Martin Weale and Ian McCafferty - changed their minds after calling for a rate hike for the previous five months.

Martin Beck, an advisor to the EY ITEM Club, said the minutes cemented general market opinion that a rate rise won’t come until well into 2016.

“Today is a confirmation that there is very little prospect of any rate hike this year with the two arch hawks of the MPC voting to maintain the status quo. We have been predicting that the first rate rise with come in Q1 next year, but that could now be even later,” Beck said.

Data released on Wednesday morning also revealed that the UK unemployment rate fell to 5.8% in the three months to November from 6% the previous period, better than analysts had expected.

The upcoming European Central Bank (ECB) meeting on Thursday is the main risk event of the week on the back of increased hopes that policymakers will implement full-on quantitative easing (QE) to boost growth and lift the Eurozone out of deflation.

However, ECB Governing Council member Ewald Nowotny was reported as saying at a conference on Wednesday that people “shouldn’t get over excited about [the meeting]”.

Corporate updates impress

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.

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.

Dixons Carphone was also in positive territory after raising its profit guidance on the back of strong Christmas trading. Like-for-like sales increased 7% for the nine weeks ended 3 January as the group took further market share across electricals and mobile in the UK and Ireland, the Nordics and Greece.

After an earlier dip into the red, BHP Billiton rose after maintaining its full-year production guidance following a 9% increase in output in the first half, helped by record volumes across eight operations and five commodity classes.

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 3,055.54 +0.83%
FTSE 100 6,665.63 +0.69%
FTSE 250 16,166.73 +0.25%

FTSE 100 - Risers
Pearson (PSON) 1,292.00p +4.53%
BG Group (BG.) 867.60p +2.15%
Barratt Developments (BDEV) 436.30p +2.11%
BT Group (BT.A) 422.50p +1.95%
Vodafone Group (VOD) 234.25p +1.85%
ARM Holdings (ARM) 1,046.00p +1.75%
BAE Systems (BA.) 500.50p +1.71%
Shire Plc (SHP) 4,834.00p +1.70%
Intu Properties (INTU) 355.20p +1.63%
Persimmon (PSN) 1,492.00p +1.63%

FTSE 100 - Fallers
Intertek Group (ITRK) 2,259.00p -5.28%
Sports Direct International (SPD) 726.00p -4.54%
Weir Group (WEIR) 1,625.00p -2.93%
Glencore (GLEN) 252.50p -1.92%
Smiths Group (SMIN) 1,061.00p -1.49%
Antofagasta (ANTO) 694.00p -1.49%
Anglo American (AAL) 1,107.50p -1.25%
Kingfisher (KGF) 332.90p -1.10%
Babcock International Group (BAB) 1,017.00p -1.07%
Associated British Foods (ABF) 3,018.00p -1.05%

FTSE 250 - Risers
Man Group (EMG) 170.00p +5.26%
FirstGroup (FGP) 106.90p +4.80%
Pets at Home Group (PETS) 209.90p +3.45%
Centamin (DI) (CEY) 70.65p +2.24%
Fidelity China Special Situations (FCSS) 140.00p +2.19%
Domino Printing Sciences (DNO) 666.00p +2.07%
NMC Health (NMC) 474.60p +2.06%
Greggs (GRG) 849.00p +2.04%
LondonMetric Property (LMP) 158.10p +2.00%
Scottish Mortgage Inv Trust (SMT) 247.70p +1.98%

FTSE 250 - Fallers
Afren (AFR) 22.00p -14.70%
Poundland Group (PLND) 345.00p -5.01%
Domino's Pizza Group (DOM) 675.50p -3.29%
Vedanta Resources (VED) 416.40p -3.16%
Bank of Georgia Holdings (BGEO) 1,869.00p -3.06%
UDG Healthcare Public Limited Company (UDG) 390.00p -2.89%
Ophir Energy (OPHR) 122.10p -2.86%
Drax Group (DRX) 353.30p -2.56%
Wetherspoon (J.D.) (JDW) 799.50p -2.38%
Grainger (GRI) 188.40p -2.38%