London midday: Stocks rally ahead of ECB policy amid stimulus hopes

London stocks rallied on Thursday ahead of the European Central Bank’s policy announcement as Shanghai’s market paused for a two-day holiday.

Shanghai’s index is closed on Thursday and Friday for the World War II commemorations, which analysts believe is likely to give investors a break from the volatility caused by China concerns.

With trading in Shanghai on hiatus, attention turned to the ECB’s policy decision and a slate of economic data.

The ECB is widely expected by analysts to keep interest rates, the deposit facility and the marginal lending facility unchanged at 0.05%, -0.205 and 0.30% respectively.

However, ECB executive board member Peter Praet last week sparked speculation that the quantitative easing programme could be extended amid market turbulence caused by China concerns.

"The ECB is ready to expand or extend its QE programme if needed, as a slump on commodity prices and risks to global growth threaten its inflation goal of 2%,” he said.

Weak inflation, with consumer prices remaining at 0.2% in August, has also added to the case for more QE. The ECB has said it would continue QE until at least September 2016.

“The ECB is likely to sound more dovish than in July due to the downward revisions in the headline inflation trajectory caused by lower oil prices,” according to UnitCredit analysts.

“The negative impact on the euro should be very limited and confined to a short-term knee-jerk reaction, as markets may already be aware that lower oil prices are a boost rather than a problem for the EU economy.”

In economic data, the UK service sector grew at its weakest pace in over two years.The UK Markit service Purchasing Managers’ Index (PMI) 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.

Still to come, US initial jobless claims are due in afternoon trading ahead of the all-important non-farm payrolls on Friday. Two separate releases on service activity in the US will also be released by Markit and ISM.

Among corporate stocks, 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 a day after saying it now controls 98.05% of Irish Airline Aer Lingus Group.

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

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

On the downside, Premier Oil declined after saying it has plugged and abandoned an exploration well in the Norwegian sector of the North Sea.

Market Movers

techMARK 3,101.87 +1.28%

FTSE 100 6,177.37 +1.55%

FTSE 250 17,050.10 +0.97%

FTSE 100 - Risers

easyJet (EZJ) 1,767.00p +5.68%

International Consolidated Airlines Group SA (CDI) (IAG) 568.50p +4.79%

Glencore (GLEN) 128.05p +4.28%

Morrison (Wm) Supermarkets (MRW) 169.60p +3.99%

Anglo American (AAL) 711.00p +3.98%

Antofagasta (ANTO) 595.50p +3.12%

ARM Holdings (ARM) 949.50p +3.04%

Reckitt Benckiser Group (RB.) 5,847.00p +3.03%

Rio Tinto (RIO) 2,331.50p +2.87%

BHP Billiton (BLT) 1,094.50p +2.82%

FTSE 100 - Fallers

GKN (GKN) 281.00p -0.21%

G4S (GFS) 248.50p -0.12%

RSA Insurance Group (RSA) 509.00p -0.10%

FTSE 250 - Risers

Lookers (LOOK) 178.00p +7.68%

Man Group (EMG) 158.70p +6.15%

Indivior (INDV) 230.50p +6.12%

Thomas Cook Group (TCG) 108.50p +4.63%

Berendsen (BRSN) 1,024.00p +3.91%

TalkTalk Telecom Group (TALK) 299.70p +3.38%

Tullow Oil (TLW) 212.30p +3.36%

AO World (AO.) 132.90p +3.10%

Hays (HAS) 161.80p +2.99%

Rotork (ROR) 208.10p +2.87%

FTSE 250 - Fallers

Go-Ahead Group (GOG) 2,395.00p -5.56%

Lonmin (LMI) 29.54p -5.47%

Michael Page International (MPI) 481.60p -3.23%

National Express Group (NEX) 293.00p -2.37%

Micro Focus International (MCRO) 1,239.00p -2.29%

esure Group (ESUR) 233.90p -2.26%

Zoopla Property Group (WI) (ZPLA) 239.00p -1.57%

Ted Baker (TED) 3,023.00p -1.56%

Petra Diamonds Ltd.(DI) (PDL) 119.50p -1.32%

Amlin (AML) 499.10p -1.17%

FTSE TechMARK - Risers

Triad Group (TRD) 41.50p +14.48%

Filtronic (FTC) 7.25p +5.45%

Skyepharma (SKP) 331.50p +2.39%

Spirent Communications (SPT) 78.75p +2.27%

E2V Technologies (E2V) 242.00p +2.11%

Consort Medical (CSRT) 975.00p +2.09%

NCC Group (NCC) 244.00p +1.88%

Sepura (SEPU) 172.00p +1.47%

Oxford Instruments (OXIG) 834.50p +1.15%

XP Power Ltd. (DI) (XPP) 1,640.00p +0.99%

FTSE TechMARK - Fallers

Torotrak (TRK) 5.71p -4.44%

Oxford Biomedica (OXB) 7.76p -3.00%

SDL (SDL) 369.25p -1.27%

CML Microsystems (CML) 350.00p -0.71%

BATM Advanced Communications Ltd. (BVC) 18.00p -0.69%

Dialight (DIA) 618.00p -0.40%