FTSE rallies but cliff face still worries Wall St
Britain’s benchmark share index closed up 25.69 points at 5,961.59 as the so-called “Santa rally” took hold, with sentiment also helped by the European Central Bank (ECB) opening the path to cheaper funding for struggling Greek banks and a Greek credit upgrade from Standard & Poor’s.
However, stocks across the Atlantic struggled to gain traction amid fears of a last-minute stand-off between Democrats and Republicans. The fiscal cliff would see steep tax hikes and spending cuts come into effect in the new year.
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Hide AdCraig Erlam, market analyst at Alpari UK, said: “Investors in the US appear to be reacting to comments made by President Obama’s aid who claimed he would reject any ‘plan B’ offered by the Republicans. This is a concern to anyone relying on a deal being done by the end of the year.
“These negotiations are starting to become a bit of a rollercoaster ride.”
Scott Eldridge at Caprin Asset Management in Virginia said: “It seems like all the parties have made progress, but it continues to drown out all the other noise in markets.”
The ECB re-opened the path to cheap financing for Greek banks, allowing the country’s sovereign debt to be used as collateral in ECB funding operations.