LONDON (Reuters) – Top shares rose on Thursday as assurances from U.S. and European central banks that they would pursue supportive monetary policy helped extend a rebound after a deadlocked Italian election earlier this week.
U.S. Federal Reserve Chairman Ben Bernanke sparked a rally on Wall Street for the second day in a row on Wednesday after he defended the Fed‘s asset purchases programme to the House Committee in Congress.
European Central Bank head Mario Draghi issued a similarly dovish set of comments.
Bernanke’s testimony to the Senate on Tuesday evening had helped British stocks add 0.9 percent on Wednesday, recovering from sharp falls following a stalemate in Italian elections.
“Ben Bernanke‘s two day testimony has been well timed and the continued commitment to stimulus measures has given the bulls a new lease of life,” Fawad Razaqzada, market strategist at GFT Markets, said.
Stimulus spending by the Fed, alongside the European Central Bank, the Bank of England and others, has underpinned stock markets through a rally stretching back to last July. The FTSE 100 is near five-year highs.
“I think the FTSE has room to the downside now,” Razaqzada said.
“If it breaks above the 6,400 level, potentially we could see another 200 point rise. But otherwise the market looks very tired.”
The FTSE 100 was up 24.94 points, or 0.4 percent, at 6,350.82 by 1131 GMT, with financials adding over 14 points to the index, accounting for the majority of the rise.
Banking stocks notched up solid gains on the central banks’ reaffirmation of a dovish stance. Royal Bank of Scotland was the notable exception after disappointing results from the part-nationalised lender.
RBS shed 3.7 percent, among the top FTSE 100 fallers, after the bank made a pretax loss of 5.2 billion pounds, hit by a 4.6 billion charge for losses on the value of its own debt.
“The trading floor dislikes the RBS update as the bottom line is way off. An increase in operating profit might please those wearing rose-tinted glasses,” Marc Kimsey, Senior Trader at Accendo Markets, said in a note.
“Claims the bank is ‘much closer now’ to paying dividends and the government selling its stake are seen as premature and an attempt to apply some gloss. ‘Closer’ doesn’t mean imminent.”
Copper miner Kazakhmys was the top faller, shedding 5.7 percent after warning it could be forced to take a hit estimated at over $1.5 billion on the value of its holding in Kazakh peer ENRC.
International Airlines Group, meanwhile, advanced 7.5 percent, topping the blue-chip leader board, after its 2012 operating loss of 68 million euros ($89.14 million) came in better than consensus.
(Editing by Toby Chopra)