The FTSE rose following overnight markets after US Federal Reserve chair Janet Yellen eased concerns about interest rate rises and tensions appeared to recede in Ukraine.
Yellen said ‘considerable slack’ in the labour market was evidence central bank stimulus would be needed for ‘some time’. That has soothed fears of rate rises sparked by her comments two weeks ago that the cost of borrowing could rise ‘around six months’ after the end of quantitative easing.
Agreement between Russia and the US over the need for a diplomatic solution to the Ukraine crisis also pushed markets higher.
The FTSE 100 gained 26.5 points, or 0.4%, to 6,625. Aberdeen Asset Management (ADN.L), was the biggest riser, advancing 22.4p or 5.7% to 412.4p, after the fund manager said it would seek more cost savings from its £550 million acquisition of Scottish Widows Investment Partnership, which completed today, than originally planned. It said the cuts were due to ‘subdued’ conditions in emerging markets, an area of specialism for the group. Aberdeen bought Swip from Lloyds Banking Group (LLOY.L), a penny firmer at 75.65p.
Babcock (BAB.L) rose a further 50p or 3.7% to £13.97 after yesterday the engineering contractor was named with US rival Fluor as preferred bidders for a 14-year, £7 billion contract to manage the decommissioning of Britain’s nuclear power plants.
Miners continued to benefit from hopes of more economic stimulus from China. BHP Billiton (BLT.L) added 50p, or 2.7%, to reach £18.93, as it announced it was considering a spin-off of unwanted businesses, such as its aluminium and nickel arms, into a separate company.
Insurers continued to recover from the City regulator’s botched announcement last week of plans to investigate historic pensions and investment sales.
Financial Conduct Authority (FCA) chief executive Martin Wheatley has admitted the regulator’s announcement of the review ‘was clearly not the FCA’s finest hour’. Shares plunged on Friday morning following a Telegraph report on the plans, with the slump curtailed only when the FCA later issued a statement clarifying its plans.
Aviva (AV.L) traded 8.9p, or 1.9%, higher at 485.9p, with Legal & General (LGEN.L) up 3.1p or 1.5% at 207.8p, Prudential (PRU.L) 12p or 0.9% better at £12.80 while Standard Life (SL.L) added 11.5p, or 0.9%, to reach £12.65.
Today's rise in the blue-chip index follows a choppy day of trading on Monday. The FTSE closed yesterday’s session down 17.2 points, or 0.3%, just over 6,598, having made gains in the morning. That led to the index’s first quarterly drop since June.
Fears over deflation in the eurozone were sparked yesterday after estimates showed inflation in the euro area had fallen to a lower-then-expected 0.5% in March, down from 0.7% in February and the lowest rate since November 2009.