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FTSE hits 8-month high on US outlook; L&G gains

Britain’s FTSE 100 nears 6,000 after a majority of US financial groups pass 'stress tests' and following a raft of upbeat US economic data.

 
FTSE hits 8-month high on US outlook; L&G gains

Britain’s FTSE 100 advanced towards the 6,000 mark on Wednesday, led by bank stocks, after a number of US financial groups passed 'stress tests' and following a raft of upbeat US economic data.

The UK index of blue-chip shares gained 0.33%, or 20 points, to 5,976 – its highest level since early July last year – and the All Share index hardened 0.36%, or 11 points, to 3,104. See the FTSE’s performance and the index’s top winners and losers.

Fed comments

Speaking after solid US retail sales and jobs reports, policymakers at the Federal Reserve kept rates on hold and provided a more optimistic outlook for the economy. The Fed also gave no signal that more monetary stimulus was on its way.

‘The statement was largely as expected and, in our view, reflects a further decrease in the odds of further quantitative easing resulting from better recent data,’ said Troy Davig, economist at Barclays Capital, referring to monetary stimulus from the Fed.

‘For further easing, our view is that either the economy would need to slow suddenly or inflation would have to decline more than the committee currently anticipates. We do not expect further easing this year.’

Other stock markets in Europe also improved: Germany’s DAX index climbed 0.96% to 7,063, France's CAC 40 index increased 0.52% to 3,570, and the FTSEurofirst 300 index of top European shares was 0.66% higher at 1,103.

L&G lifts dividend

Legal & General (LGEN.L) was the top riser on the FTSE 100, climbing 6p to 131.5p, after the insurer boosted its dividend by 35% and reported better-than-expected earnings.

‘We view this as a very confident statement by the company, but continue to see significant strategic challenges ahead,’ said Kevin Ryan, analyst at Investec. ‘We expect to retain our sum of the parts-based target price and, given recent share price strength, move our recommendation to “sell”.’

Rival insurers gained on the back of the results: Prudential (PRU.L) added 21.5p to 784.5p, Standard Life (SL.L) rose 4.4p to 242.9p and Aviva (AV.L) improved 5.4p to 366p.

Banks were also among the biggest gainers after all but four of 19 US financial groups passed stress tests held by the Fed, enabling them to return money to shareholders. Barclays (BARC.L) gained 9p to 248p and Lloyds (LLOY.L) hardened 0.7p to 35.3p.

On the FTSE 250, Yule Catto & Co (YULC.L) leapt 18p to 228p after the chemicals maker said underlying pre-tax profit doubled last year to £84.8 million.

Meanwhile, sterling strengthened 0.13% versus the dollar to $1.572 and 0.28% against the euro to €1.204 ahead of UK jobless figures and eurozone inflation data.

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Phew! Next scorched by heat wave as RBS lifts FTSE

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