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FTSE shrugs off Draghi's 'monetary policy on the cheap'

by Daniel Grote on Apr 03, 2014 at 15:37

Focus will instead turn to ECB president Mario Draghi's comments at this afternoon's press conference. Draghi is expected to reassure the markets that the ECB could and would take action if needed, but that this is not necessary yet.

'As a minimum many investors are looking for at least something from the ECB today, even if it's nothing more than a line in the sand, a condition of some sort that has to be met before easing can occur - or, to give it is more fashionable term, forward guidance,' said Angus Campbell, analyst at FX Pro. 

Fresh all-sector Purchasing Managers Index (PMI) figures for the UK meanwhile pointed to sustained economic growth, despite falling to a nine-month low of 58.1. In these surveys a reading above 50 separates growth from contraction. Chris Williamson, chief economist at Markit, said the figures signalled GDP growth of at least 0.7% for the first quarter of the year. 'Growth may weaken from here, but only modestly with no sharp easing in sight,' he said.

Tullow Oil (TLW.L) jumped 36.5p, or 4.8%, to 789.5p, after UBS analyst Jon Rigby upgraded the miner from 'neutral' to 'buy'.

Kingfisher (KGF.L) rose 9.6p, or 2%, to 440.8p after the home improvement retailer entered into exclusive negotiations to buy French rival Mr Bricolage in a £230 million deal. Freddie George, analyst at Cantor Fitzgerald, retained his 'hold' rating for the stock and kept his target price of 400p following the news. 'Mr Bricolage looks a compelling acquisition for Kingfisher and will strengthen its number one position in the French DIY market,' he said. 'However, in view of the size of the acquisition, we believe the company will have difficulties in getting anti-trust clearance, a process that is likely to take at least a year to conclude.

Insurers posted modest gains, with Standard Life (SL.L) up 0.6% at 391.6p, Aviva (AV.L) up 0.6% at 490.4p and Legal & General (LGEN.L) up 0.7% at 213.3p. According to the Financial Times, institutional investors are considering taking legal action against the Financial Conduct Authority after the City regulator botched its announcement of a review of insurers' historic sales last week, causing a slump in their shares. 

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