Leading shares reached a near two week high, as markets continued to recover after the volatility following the attacks in Paris.
The FTSE 100 finished up 50.96 points at 6329.93, its best level since November 6.
Central banks were one of the causes for the investor enthusiasm. The Bank of Japan left interest rates on hold overnight, while later the European Central Bank’s latest minutes added to the belief that further stimulus measures could be sanctioned in December. Earlier the US Federal Reserve hinted that rates may rise across the Atlantic, but this spooked markets less than expected.
For a start it has effectively removed much of the uncertainty of recent weeks about what the Fed may be planning, and at the same time it suggests the US central bank believes the country’s economy is strong enough to withstand dearer borrowing costs. And the feeling now is that a rate rise in December would not necessarily mean a string of further increases immediately.
Tony Cross, market analyst at Trustnet Direct said:
It appears that the message from the Fed is becoming clearer: rates will rise but will “normalise” at a lower level than previously expected. That’s good for equity investors but not great for savers and investors in bonds or cash.
The biggest riser in the FTSE 100 was Johnson Matthey. The the technology group and platinum specialist jumped 237p or almost 10% to £26.94 after it said it would return £305m to shareholders as a special dividend, representing 150p a share. The move comes following the sale of its gold and silver refining and research chemicals businesses. The company - which had been caught up in the fallout from the VW emissions scandal since it makes catalytic convertors - also reported a 4% dip in half year profits to £208.3m. It said the full year outlook was in line with expectations.
Other companies also benefited from positive updates. Royal Mail rose 22.5p to 476.7p following its figures while building materials group CRH climbed 97p to £18.75 as it said it expected strong growth in the US and recent acquisitions should lead to an increase in full year earnings of around 25%. Nine month earnings rose 34%.
Mining shares benefited from hopes of a stronger global economy in the wake of the Fed minutes, with Rio Tinto rising 29.5p to £22.90. BHP Billiton was 8p better at 888.7p after it said keeping a strong balance sheet would be a priority and it would update shareholders on its dividend - which investors fear could be under pressure - in February.
Elsewhere catering group Compass climbed 19p to £10.75 after better than expected figures from peer Sodexo.
But housebuilders came under pressure after a disappointing update from Bovis Homes, down 85p at 904p. Persimmon fell 25p to £18.40 while Taylor Wimpey lost 0.4p to 185.3p.
A number of companies saw their shares go ex-dividend. Vodafone fell 2.5p to 221.5p and Imperial Tobacco lost 78p to £34.92.
Among the mid-caps Poundland plunged 20% to 222.7p after a 26% fall in first half profits and a warning of volatile trading conditions.
But Qinetiq climbed 24.4p to 260.1p as the defence technology group issued a postive trading update and announced a £50m share buyback.
Lower down the market, financial services group Walker Crips jumped 12.5% to 47.25p after half year revenues rose 22% to £13.3m, with pretax profit up five-fold to £589,000, despite difficult markets and a rise in regulatory costs.
Barker Poland Asset Management made a first time contribution after its acquisition in March this year, and chairman David Gelber said: “We continue to increase the proportion of our revenues earned as fees, rather than through transaction driven commissions.”
On Aim, Orosur Mining added 20% to 6.75p after investor meetings with the chief executive of the South America-focused gold specialist.
Finally, Frontier IP rose 10% to 21.25p as the group, which specialises in commercialising intellectual property, reported a jump in full year profits from £27,000 to £647,000.
