Britain's FTSE pares most gains as central bank holds back on stimulus
Reuters: London, Mar 08 2013, 02:28 IST
Britain's blue chip shares rose on Thursday but shed most early gains after central banks held firm on their monetary policy, confounding some investors' hopes of further easing. Cyclical stocks, which rise and fall with investor confidence about the economy, gained after heavily indebted Spain hit the top end of its fund-raising target in a bond sale on Thursday. However, the UK's blue chip share index came off an intraday high of 6,459.68 after the Bank of England decided against more stimulus for Britain's ailing economy. "Traders were expecting a little bit more from the Bank of England, maybe increasing the size of the asset purchase programme. We didn't get anything on that front, and stocks have traded sideways since then," Manoj Ladwa, head of trading at TJ Markets, said. The European Central Bank also left policy unchanged. However, ECB President Mario Draghi contributed to a volatile afternoon of trade in European shares when he was non-committal as to whether he felt equity markets were fairly priced at current lofty levels. "While they aren't increasing stimulus, central banks are still maintaining their liquidity programmes, and it is a liquidity-driven market. Earnings are also coming in better than expected," Ladwa added, saying he expected equity markets to push higher in the coming days. The FTSE 100 closed up 11.52 points, or 0.2 percent, at 6,439.16, having faltered at the 6,460 level - a five year high - for the second day running. Impressive earnings reports on Thursday came from Aggreko
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