London close: Stocks finish higher as ECB extends QE programme
London stocks finished in positive territory on Thursday after the European Central Bank announced a longer-than-expected extension to its quantitative easing programme.
The FTSE 100 closed up 0.42% to 6,931.55 points.
Oil prices also advanced ahead of a Saturday meeting in Vienna between OPEC and non-OPEC members which may result in a further cut in production.
Brent crude was up 0.91% to £53.49 per barrel while West Texas Intermediate gained 0.97% to $50.26 per barrel at 1643 GMT.
The ECB decided to extend its quantitative easing programme by nine months but at a tapered pace. It will continue its monthly asset purchases at €80bn until March 2017 before scaling back the programme to €60bn per month until the end of December.
Analysts were expecting the ECB to extend the programme for six months amid inflationary pressures and heightened political uncertainty.
The ECB decided, as anticipated, to keep benchmark interest rates, the marginal lending facility rate and the deposit facility rate unchanged at 0.00%, 0.25% and -0.40%, respectively.
ECB President Mario Draghi said if the outlook was to become “less favourable” or financial conditions worsened the Governing Council would consider increasing the quantitative easing programme in size or duration.
Draghi tried to reassure the market that the ECB’s move should not be considered as tapering.
“The immediate reaction to the news was disappointment, since he also cut the monthly purchase level, but markets focused on the longer timeframe, and then got even more excited when the bank declared it would buy assets yielding below its deposit rate,” said IG’s Chris Beauchamp.
“He might have cut the amount of alcohol in the punch bowl, but the punch will be served for longer, while the choice of tipple on offer has been widened as well.”
European stocks rallied at the close while the euro fell 1.38% against the dollar at $1.0605 and declined 0.96% versus the pound at £0.84355.
Elsewhere, trade data showed Chinese exports rose 0.1% in dollar terms in November, surprising analysts who had expected a 5% decline. Imports gained 6.7%, compared to estimates for a 1.9% drop. The trade surplus narrowed to $44.61bn from $49.06bn, missing forecasts of $46.90bn.
In the US, the Labor Department said initial jobless claims fell to 258,000 in the week to 3 December from 268,000 the previous week. Economists had expected 255,000 claims.
On the corporate front, Capita was a top faller as the company decided to offload the majority of its Asset Services division and a small number of other 'non-core' businesses in order to become leaner, cut debt and focus fully on business process outsourcing.
Sports Direct slumped as it reported a 57% drop in underlying profit before tax to £71.6m in the 26 weeks to 23 October.
TUI was a high riser as the travel group posted its full year results to 30 September with turnover from continuing operations softening slightly by 1.9% to €17.19bn, though at constant currencies it did improve 1.4%.
Glencore gained on reports it is part of a consortium that is poised to buy a 19.5% stake in Russia’s largest oil company Rosneft for €10.2bn.
Evraz advanced as the price of Chinese steel rebar 25mm rose to $502.2 per tonne from $495.0/t.
Packaging specialist DS Smith was on the front foot as it posted its half-year results to 31 October on Thursday, with adjusted operating profit up 23% - or 9% at constant currency - to £226m.
IG Group’s shares continued to slide after the Financial Conduct Authority recommended tighter rules on contract for difference products sold to customers, including spread bets. Numis upgraded IG Group to ‘buy’ from ‘hold’ but cut its target price to 590p from 850p, saying it believes the spreadbetting firm is well placed to manage the proposed new regulations.
Market Movers
FTSE 100 (UKX) 6,931.55 0.42%
FTSE 250 (MCX) 17,681.99 0.32%
techMARK (TASX) 3,240.08 0.31%
FTSE 100 - Risers
WPP (WPP) 1,723.00p 4.61%
TUI AG Reg Shs (DI) (TUI) 1,099.00p 3.29%
International Consolidated Airlines Group SA (CDI) (IAG) 448.50p 3.17%
Polymetal International (POLY) 775.50p 3.05%
AstraZeneca (AZN) 4,116.00p 2.72%
London Stock Exchange Group (LSE) 2,767.00p 2.68%
ITV (ITV) 181.50p 2.25%
Rio Tinto (RIO) 3,294.00p 2.25%
Sky (SKY) 789.50p 2.13%
Glencore (GLEN) 302.65p 1.99%
FTSE 100 - Fallers
Capita (CPI) 485.30p -13.95%
Standard Chartered (STAN) 666.40p -2.67%
Royal Mail (RMG) 461.40p -2.30%
Babcock International Group (BAB) 938.00p -2.09%
Rolls-Royce Holdings (RR.) 658.50p -2.08%
Next (NXT) 4,870.00p -1.77%
Prudential (PRU) 1,627.50p -1.30%
Dixons Carphone (DC.) 354.10p -1.09%
Direct Line Insurance Group (DLG) 357.70p -1.08%
SSE (SSE) 1,483.00p -1.00%
FTSE 250 - Risers
Evraz (EVR) 262.10p 9.71%
Berendsen (BRSN) 840.00p 8.46%
NMC Health (NMC) 1,462.00p 6.40%
Smith (DS) (SMDS) 419.10p 5.83%
Aggreko (AGK) 867.00p 4.77%
NCC Group (NCC) 209.00p 4.34%
Smurfit Kappa Group (SKG) 1,871.00p 4.10%
Pagegroup (PAGE) 387.00p 4.00%
Kaz Minerals (KAZ) 420.00p 3.99%
Elementis (ELM) 268.20p 3.31%
FTSE 250 - Fallers
CMC Markets (CMCX) 105.30p -9.61%
Sports Direct International (SPD) 288.80p -8.29%
IG Group Holdings (IGG) 478.80p -6.67%
William Hill (WMH) 292.70p -6.04%
Ocado Group (OCDO) 262.10p -5.44%
Aberdeen Asset Management (ADN) 262.50p -4.93%
Restaurant Group (RTN) 331.00p -4.09%
Big Yellow Group (BYG) 642.00p -3.82%
DFS Furniture (DFS) 224.30p -3.44%
ICAP (IAP) 468.00p -2.76%