Fed stimulus plan injects timely boost

STOCKS in the United States surged yesterday on hopes of further stimulus measures to boost the country's flagging economy, giving a late boost to London's shares.

The FTSE 100 index closed up 37.47 points or 0.6 per cent at 5,906.43 after US Federal Reserve chairman Ben Bernanke said he would consider additional measures - including a third round of quantitative easing, or QE3 - if the US economy doesn't pick up.

Will Hedden, sales trader at IG Index, said: "Fed chairman Ben Bernanke alluded to QE3 and sent the dollar lower against other major currencies, injecting some more volatility into an already hectic market. Never a dull moment when Ben is around."

Credit ratings agency Fitch said Italy's deficit reduction plan should be enough to stabilise its financial position, bringing some stability to the currency markets. The euro held at €1.136 against the pound, which picked up to $1.61 against the dollar after Bernanke's comments.

BSkyB was a strong performer late in the day on confirmation that News Corporation has withdrawn its takeover bid for the satellite broadcaster.

Shares in the Sky TV owner rose 13.5p to 705.5p as brokers said it cleared some of the uncertainty surrounding the company.

Marks & Spencer was at the bottom of the FTSE 100 index as investors worried about the difficult outlook facing the retail sector. The high street bellwether lost 2.5 per cent or 9.2p to 363.8p despite posting a 1.7 per cent rise in like-for-like sales in the 13 weeks to 2 July.

Silver giant Fresnillo rose 80p at 1,520p, Kazakhmys was not far behind at 52p higher at 1,365p while Eurasian Natural Resources added 17p at 784.5p as metal prices rose.

Fortunes in the banking sector - which came under heavy pressure yesterday on the back of speculation over the health of Italy's fiscal position - were mixed. Barclays was 0.4p higher at 228p and Lloyds Banking Group added 0.5p at 44.4p but Royal Bank of Scotland dropped 0.5p to 35.5p.

Highs and lows continued in the retail sector as Burberry and SuperGroup stole the limelight from M&S with a stellar shares performance. Burberry was up nearly 6.5 per cent or 94p to 1,531p, its highest close, after the luxury goods group continued to defy conditions by announcing double-digit quarterly sales growth in both its retail and wholesale divisions.

The performance was mirrored at Superdry-owner SuperGroup, which cheered investors with a strong pick-up in recent trading and a jump in full-year profits to 47.3 million. The FTSE 250 index stock surged 21 per cent or 184.5p to 1,062p as it continues to recover from a recent wobble in its share price.

There was no such a rally for floor coverings firm Topps Tiles after it said like-for-like sales declined by 1.9 per cent in the 13 weeks to 2 July.Shares were 3 per cent lower, down 1.8p at 55.2p.

Chocolatier Thorntons saw its shares rise by 2 per cent despite revealing further pressure at its stores in a trading update for the eight weeks to 2 June. Shares were up 1.4p at 54.3p.

Dundee cash machine advertising software firm I-Design continued its recent good form - up 8.5 per cent or 3.5p at 44.5p - after a string of contract wins.