FTSE gains as Bank expected to turn on QE tap again

Britain’s FTSE 100 inched higher on Thursday as the Bank of England was expected to hose fresh stimulus at the floundering UK economy, and amid hopes that Greece might finally secure a fresh bailout deal.

The UK index of blue-chip shares hardened 0.47%, or 28 points, to 5,904 and the All Share index rose 0.48%, or 15 points, to 3,049. See the FTSE’s performance and the index’s top winners and losers.

Policymakers could unleash as much as £75 billion

Both the Bank of England and European Central Bank (ECB) are set to announce key policy decisions later in the day. But while the ECB was expected to stand pat on policy, economists forecast the UK central bank to announce another £50 billion in additional asset purchases known as ‘quantitative easing’ or QE.

‘The market reaction to a £50 billion increase in QE is likely to be relatively muted as it is widely expected,’ said Giuseppe Maraffino, rate strategist at Barclays Capital.

However, the strategist added, ‘We think a QE extension should ultimately support market valuations as it will see a continuation of the imbalance of supply and demand of gilts over the next three months.’

Still, Annalisa Piazza, economist at Newedge Strategy, said she could not rule out a more aggressive increase to £75 billion. The Bank’s monetary policy committee vote was also likely to show a wide range of views, she added.

The pound strengthened 0.13% versus the dollar to $1.584 ahead of the announcement, while the yield – or implied interest rate – on benchmark 10-year UK government gilts eased two basis points to 2.16%.

Meanwhile, European stocks elsewhere improved after Lucas Papademos, Greek prime minister, said he hoped party leaders could finally agree to austerity measures demanded by Greece’s international lenders before a meeting of eurozone finance ministers later in the day.

Germany’s DAX index gained 0.81% to 6,803, France's CAC 40 index was 0.71% higher at 3,434, and the FTSEurofirst 300 index of top European shares took on 0.45% to 1,075.

Hargreaves Lansdown slips

BG Group (BG.L) topped the leader board on the FTSE 100, climbing 47p to £14.93, after the gas producer unveiled a better-than-expected 40% jump in underlying fourth-quarter profit.