London close: UK equities gain as ECB leaves door open on QE

UK equities pushed higher on Thursday as the closure of Chinese markets gave worried investors a break and the European Central Bank kept the door open on further quantitative easing.

Shanghai’s index is closed on Thursday and Friday for the World War II commemorations, which analysts believe gives the market a much-needed breather from the volatility caused by concerns on China’s flagging economy.

With China closed, the focus turned to the ECB’s policy announcement and press conference. Unsurprisingly, the ECB kept its key interest rates, deposit facility and marginal lending facility unchanged.

President Mario Draghi said while governing council members did not discuss further QE at its latest policy meeting, they will continue to assess economic data and take further action if necessary. He said QE would continue until September 2016 or beyond until inflation begins to rise towards the ECB's target of just below 2%.

In the wake of market turbulence, the ECB downgraded its forecasts for economic growth and inflation.

The monetary authority now expects Eurozone gross domestic product to rise 1.4% in 2015, compared to June's projection of 1.5%. GDP is predicted to increase 1.7% in 2016 versus its June forecast of 1.9%.

Annual consumer prices are forecast to rise 0.1% in 2015, 1.1% in 2016 and 1.7% in 2017. Draghi said in comparison to June 2015 projections the outlook has been revised down largely owing to oil prices.

“Three things instantly jump out from this report: firstly, the likelihood of the current QE programme ending in September 2016 is looking even more remote; secondly, with these figures correlated before Black Monday, we should expect both growth and inflation to be downgraded even further; and finally, the comments from both the Bank of England and George Osborne that events in Asia are only going to have a mild effect on the UK’s economic projections look even less credible,” said Alastair McCaig, market analyst at IG.

In economic data, the UK service sector grew at its weakest pace in over two years.The UK Markit service Purchasing Managers’ Index declined from 57.4 in July to 55.6 in August, its lowest level since May 2013 and short of the 57.7 reading analysts had expected.

Eurozone retail sales rose 2.7% year-on-year in July, better than the 2% increase that was anticipated by analysts and following a 1.7% rise a month earlier.

In the US, the Labor Department said initial jobless claims rose by 12,000 to 282,000 in the last week of August, to reach the highest level in two months, although initial claims remained at very low levels, a sign companies aren't laying off many workers. The figure was higher than analysts' expectations for a 275,000 reading.

The report comes ahead of the all-important non-farm payrolls on Friday which the Federal Reserve will be closely monitoring as it weighs the timing of its first interest rate increase in nine years.

Elsewhere in the US, the Institute for Supply Management said its services index slipped less-than-expected in August. The service index fell from 60.3% to 59% last month, remaining above the 58% analysts had expected and comfortably above the 50% threshold that indicates improving conditions in the market.

On the company front, Easyjet was flying higher after lifting its full-year profit guidance as it said record passenger numbers in August offset higher costs.

International Consolidated Airlines also ascended after saying it carried 12.4% more passengers in August than it did in the same month last year.

Mining stocks, including Anglo American, BHP Billiton and Glencore, advanced as silver and copper prices climbed.

Supermarket retailer Wm Morrison got a boost after UBS upgraded the stock to ‘neutral from ‘sell’ and lifted the price target to 175p from165p.

Lookers rallied on news the motor retail and aftersales service company acquired Addison Motors, trading as Benfield Motor Group, for £87.5m in cash.

Market Movers

techMARK 3,104.74 +1.37%

FTSE 100 6,194.10 +1.82%

FTSE 250 17,077.03 +1.13%

FTSE 100 - Risers

Glencore (GLEN) 130.95p +6.64%

Anglo American (AAL) 725.00p +6.03%

easyJet (EZJ) 1,762.00p +5.38%

Morrison (Wm) Supermarkets (MRW) 170.80p +4.72%

BHP Billiton (BLT) 1,110.00p +4.27%

International Consolidated Airlines Group SA (CDI) (IAG) 564.50p +4.06%

Fresnillo (FRES) 622.00p +3.93%

Schroders (SDR) 2,818.00p +3.64%

Standard Chartered (STAN) 741.40p +3.30%

Rio Tinto (RIO) 2,341.00p +3.29%

FTSE 100 - Fallers

Weir Group (WEIR) 1,328.00p -1.12%

RSA Insurance Group (RSA) 508.50p -0.20%

G4S (GFS) 248.50p -0.12%

GKN (GKN) 281.30p -0.11%

FTSE 250 - Risers

Lookers (LOOK) 180.50p +9.20%

Man Group (EMG) 160.30p +7.22%

IP Group (IPO) 238.90p +6.08%

Indivior (INDV) 229.10p +5.48%

Bank of Georgia Holdings (BGEO) 1,787.00p +5.12%

TalkTalk Telecom Group (TALK) 304.20p +4.93%

Thomas Cook Group (TCG) 108.70p +4.82%

Tullow Oil (TLW) 215.30p +4.82%

AO World (AO.) 135.00p +4.73%

Kaz Minerals (KAZ) 163.00p +4.69%

FTSE 250 - Fallers

Lonmin (LMI) 28.96p -7.33%

Go-Ahead Group (GOG) 2,401.00p -5.32%

Zoopla Property Group (WI) (ZPLA) 232.00p -4.45%

National Express Group (NEX) 289.00p -3.70%

Micro Focus International (MCRO) 1,233.00p -2.76%

Michael Page International (MPI) 486.10p -2.33%

esure Group (ESUR) 234.80p -1.88%

Booker Group (BOK) 176.20p -1.56%

Ted Baker (TED) 3,024.00p -1.53%

Pets at Home Group (PETS) 294.70p -1.11%

FTSE TechMARK - Risers

Triad Group (TRD) 41.00p +13.10%

Filtronic (FTC) 7.25p +5.45%

Sepura (SEPU) 177.50p +4.72%

Spirent Communications (SPT) 79.25p +2.92%

Skyepharma (SKP) 333.00p +2.86%

Ricardo (RCDO) 882.50p +2.86%

Consort Medical (CSRT) 977.00p +2.30%

Torotrak (TRK) 6.09p +2.01%

NCC Group (NCC) 243.50p +1.67%

Innovation Group (TIG) 40.00p +1.27%

FTSE TechMARK - Fallers

Dialight (DIA) 606.00p -2.34%

SDL (SDL) 368.00p -1.60%

Oxford Biomedica (OXB) 7.88p -1.50%

CML Microsystems (CML) 347.50p -1.42%

RM (RM.) 174.50p -0.29%