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FTSE, gold fall on Fed; Spanish bond yields rise
by Max Julius on Apr 04, 2012 at 08:51
Britain’s FTSE 100 fell on Wednesday along with gold and other European stock indices after minutes from the US Federal Reserve’s latest policy meeting dampened hopes that the central bank would soon unleash more monetary stimulus.
The UK index of blue-chip shares slipped 0.53%, or 31 points, to 5,808 and the All Share index lost 0.57%, or 17 points, to 3,020. See the FTSE’s performance and the index’s top winners and losers.
QE hopes dashed
According to minutes from their 13 March meeting, Fed policymakers believe the improving US economy diminishes the need for new asset purchases, known as quantitative easing or QE.
The members of the Federal Open Markets Committee (FOMC) said additional stimulus should only be launched ‘if the economy lost momentum’ or if inflation stays below their target, the minutes said.
‘The main takeaway from the minutes of the March FOMC meeting, in our view, is the further downgrading of the possibility of near-term policy action in light of the gradual improvement in the economic outlook,’ said Michael Gapen, economist at Barclays.
In the wake of the minutes on Tuesday, gold prices sagged 1.9% to $1,644 an ounce as the dollar surged and fears over the possible inflationary effects of monetary stimulus eased. In early trading on Wednesday, the yellow metal dropped another 0.5% to $1,636.
On the FTSE 250, the London Stock Exchange (LSE.L) improved 15p to £10.75 after Barclays upgraded the stock to ‘overweight’ from ‘equal weight’ and raised its price target to £12.40 from 960p.
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