UK stocks closing: Britain’s FTSE 100 index rose 2 percent on Tuesday as traders said dividend hunters tapped into beaten-down defensives and there was some short-covering ahead of a Federal Reserve meeting on U.S. monetary policy options.
Oil stocks including BP , pharmaceuticals including GlaxoSmithKline and telecoms including Vodafone were among those adding most points to the index.
But the total traded volume for all FTSE 100 shares was just 72 percent of the 90-day daily average.
Most of the buying was selective and driven by the momentum boys, who see a move and pile in behind it, a head of institutional trading at a UK-based brokerage said, adding conviction was low in the light of the broader issues of weakening global growth and the regional debt crisis.
Among the top individual movers was cruise firm Carnival , which ended up 6.6 percent after quarterly profits got a boost from higher spending customers in North America.
The FTSE 100’s 2 percent gain put it up 104.15 points at 5,363.71. But it remains down 0.5 percent in September and 9 percent so far this year, however.
While the blue-chip index recovered all of Monday’s fall, the Volatility index was less bullish. It ended down 8.2 percent after a climb of 10.3 percent on Monday.
Analysts said investors were wary of going short into the Federal Reserve meeting due to a belief that further monetary stimulus measures could be announced to combat slowing growth in the world’s largest economy.
Comments about the economy going forward will be important, and also some indication that they’re willing to do more support than this. What the market really wants to see is some hint of another round of quantitative easing, Keith Wade, strategist at Schroders said.
But the bearish macroeconomic backdrop remained, reinforced by a fresh batch of negative news on the euro zone debt crisis, with a surprise downgrade of Italy’s credit, a scaling back of derivatives trade between Bank of China and some European banks, and a report that Siemens had moved money out of a French bank and into the European Central Bank.