London midday: Scottish stocks lead gains ahead of crucial referendum

After a slow start, London stocks advanced on Thursday with the FTSE 100 bouncing off its lowest levels in nearly a month, as companies based north of the border advanced with the focus firmly on the Scottish referendum.

The benchmark Footsie index was trading 0.4% higher at 6,811 by noon. Three straight days of losses saw it settle at 6,780.90 on Wednesday - its lowest since 22 August.

The Scottish vote on separating from the UK began on Thursday morning with the result still too close to call given the recent momentum behind the pro-independence campaign in recent weeks. Polls opened at 07:00 and will close at 22:00.

Markets were taking a surprisingly bullish approach despite the uncertainty surrounding the vote, with equities higher and the pound rising against the dollar. However, Ilya Spivak, a strategist at DailyFX, said to expect a surge in currency volatility irregardless of the outcome.

"Opinion polls ahead of the ballot essentially point to a 50/50 chance that Scotland will secede from the UK. This implies that – whatever the final result – a surge of volatility is likely to accompany the outcome as those in the wrong are forced to readjust positions," Spivak said.

The FTSE 100's positive move followed small gains on Wall Street on Wednesday. The Dow Jones Industrial Average closed at a record high after the Fed maintained its pledge to keep short-term interest rates near zero for a "considerable time" after quantitative easing (QE) ends.

The comments came after the Federal Open Market Committee took another $10bn off of its monthly asset purchase programme to $15bn, leaving it on track to wind up QE next month. However, while it said it still sees room for improvement in labour market, policymakers lifted their interest rate projections for 2015 and 2016 slightly.

Scottish stocks higher

Scotland-based business such as RBS, Lloyds, Standard Life and Aberdeen Asset Management were among the best performers as investors readied themselves for the outcome of the referendum. RBS and Lloyds both said last week that they would redomicile in London if Scotland voted for independence.

A stronger dollar saw the price of gold and silver fall sharply on Thursday, pushing shares in precious metal producers Fresnillo, Randgold Resources, Polymetal and Centamin lower. The Fed's increased rate projections were "spurring USD gains which made the safe haven more expensive", explained analyst Mike van Dulken from Accendo Markets, as gold dropped to its lowest level since January.

Budget airline Easyjet was in demand after deciding to increase its payout ratio and said it will return 40% of its profits to shareholders from next year. The company also reached a discounted deal with Airbus to exercise existing purchase rights over 27 current-generation A320 aircraft.

Electronic parts group Premier Farnell erased early losses and was trading firmly higher by midday after meeting expectations with its first-half results with underlying revenues up 3% after a pick-up in the second quarter.

Wholesale retailer Booker was also on advance after like-for-like sales excluding tobacco were up 3.1% on last year, better than analysts' forecasts.