TRADERS’ optimism following a surprise cut in Chinese interest rates ebbed away towards the end of yesterday’s session after US Federal Reserve chairman Ben Bernanke gave few hints on whether more money printing would kick-off in America.
Fresh from a 2 per cent jump on Wednesday amid optimism that Europe will offer support to Spain’s banking sector, the FTSE 100 index leapt by as many as 100 points after Beijing’s quarter-point rates cut boosted mining stocks in London.
However, the top flight pared back its gains and closed up 63.7 points at 5,447.8 following Bernanke’s lukewarm comments.
The Bank of England also kept the City guessing over more quantitative easing after opting to keep its programme unchanged at £325 billion.
Sentiment was earlier helped by the passing of a key test in Spain as a bond auction attracted strong demand, albeit at a rate higher than in April.
Comments from Chancellor George Osborne also fuelled expectations that the eurozone will come up with a plan to stabilise the country’s banks.
Banks were cheered by developments in Spain, with Lloyds Banking Group up 0.95p to 28p, Barclays ahead 5.05p to 192.85p, and Royal Bank of Scotland 11.2p higher at 224.4p.
With the commodity sector given a lift on hopes that China is now focused on growth rather than rising inflation, Rio Tinto improved 115.5p to 3,015p, and Xstrata added 28.2p to 966.8p.
Luxury goods group Burberry, which climbed 68p to 1,392p in the wake of an upgrade from Credit Suisse, was also near the top of the Footsie risers’ board.
The broker raised its price target to 1,650p from 1,420p and said the retailer was well-equipped to find its way through the economic uncertainty.
On Wall Street, the Dow Jones Industrial Average closed up 46.17 points at 12,460.96.
Traders in New York slipped into low gear and remained there all session after Bernanke said the US central bank was ready to shield the economy if financial troubles mount.
However, he offered few hints that further monetary stimulus was imminent.
The US’s broad stock measures remained in positive territory following a steep rally on Wednesday.
Search for a job
Search for a car
Search for a house
Weather for Edinburgh
Monday 20 May 2013
Temperature: 8 C to 21 C
Wind Speed: 9 mph
Wind direction: South
Temperature: 6 C to 16 C
Wind Speed: 13 mph
Wind direction: North west