By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Stocks in London jumped out of red territory on Wednesday after minutes from the Bank of England’s latest meeting showed a more positive stance toward further quantitative easing, while investors also hoped for central bank action in the U.S. later in the day.
The FTSE 100 index UK:UKX +0.64% gained 0.6% to 5,622.29, extending gains into a fourth straight session.
Stocks were boosted by hopes of an expansion of the BoE’s 325 billion pound ($511 billion) asset- purchase program, as minutes from the Monetary Policy Committee’s latest meeting showed more members supported the stimulus measure.
Four members voted for an expansion of the quantitative easing program, up from just one at the May meeting. See: BoE mulled QE expansion at latest meeting
“The concern is, however, that more quantitative easing will have a diminished impact compared to previous bouts of money printing,” Chris Williamson, chief economist at Markit, said in a note.
“Despite this worry, it seems likely that the MPC will vote for more quantitative easing at its July meeting, adding a further £50 billion to the existing £325 billion stimulus, if nothing else to provide a boost to business and consumer confidence and keep government borrowing costs down,” he added. See: BoE’s King defeated in knife-edge June QE vote
Meanwhile, unemployment in the U.K. hit the highest level in more three years in April. The Office for National Statistics said its internationally comparable measure of unemployment fell by 51,000 in the three months to April to 2.61 million, while the unemployment rate remained at 8.2%.
And investors were further hoping for signals of further policy easing the in the U.S. at the Federal Reserve’s policy announcement due after the European market close.
On the bourse
Banks helped support the U.K. stock index. HSBC Holdings PLC UK:HSBA +0.86% HBC +0.82% tacked on 0.9%, Royal Bank of Scotland Group PLC UK:RBS +1.77% RBS +1.54% added 1.8% and Standard Chartered PLC UK:STAN +1.59% gained 1.6%.
The mining sector was also on the rise, ignoring a drop in metals prices. Vedanta Resources PLC UK:VED +1.24% added 1.2% and Anglo American PLC UK:AAL +2.07% ticked 2.1% higher.
Heavyweight miner Rio Tinto PLC UK:RIO +1.44% RIO +0.87% gained 1.4%. The firm said it would invest a further $4.2 billion in its iron-ore operations in Australia and Guinea. Rio Tinto to spend US$4.2B more on iron-ore lines
Sage Group PLC UK:SGE +5.52% advanced 5.5% as Investec Securities lifted the software firm to hold from sell. On Wednesday, the supplier of business-management solutions said it had acquired a 75% holding in Folhamatic Group, a provider of accounting, tax and payroll and regulatory content software in Brazil, for £125 million.
Consumer-product makers, however, weighed on the index, after rival Procter & Gamble Co. PG -3.36% slashed its estimate of fourth-quarter profit and sales, citing weaker-than-expected growth in developed markets. Reckitt Benckiser Group PLC UK:RB -0.88% slipped 0.9% and Unilever PLC UL -0.83% UK:ULVR -0.63% shed 0.6%. See: P&G cuts 4th-period net, sales view; outlines '13
Sara Sjolin is a MarketWatch reporter, based in London.
