Reuters: Hot Stocks: FTSE up on Fed, Japan central bank stimulus hopes

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FTSE up on Fed, Japan central bank stimulus hopes Feb 25th 2013, 10:11 Mon Feb 25, 2013 5:11am EST * FTSE 100 up 0.7 percent * Mkt shrugs off UK ratings downgrade * Bunzl gains, beats FY forecasts * Pearson weakens after results By Tricia Wright LONDON, Feb 25 (Reuters) - Britain's top share index rose on Monday, shrugging off a downgrade of the UK's credit rating as investors welcomed signs that the United States and Japan would continue with ultra easy monetary policy for some time. Britain lost its prized triple-A credit rating late on Friday as Moody's downgraded it but as the move put further downward pressure on sterling analysts said that could help UK exporters. The FTSE 100 was up 44.92 points, or 0.7 percent, at 6,380.62 by 0926 GMT. It had also risen 0.7 percent on Friday, recovering from sharp falls triggered by concerns the Federal Reserve could end its stimulus programme sooner than expected. "The FTSE remains in an uptrend ... the upside remains towards the 6,415/6,550 level. The Moody's news was expected and should not be a surprise to the market," Atif Latif, director of trading at Guardian Stockbrokers, said. Moody's slashed the UK's top AAA rating by one notch, citing weak growth prospects, which have thrown the government's deficit-reduction plans off course. Berenberg Bank said the UK rating downgrade was likely to mean slightly looser monetary and fiscal policy, which usually benefits equities. The cut weighed on the value of the pound, but that again would be another boost for equities on London's blue chip index, around 70 percent of which derive their earnings from outside the UK. Expectations for further monetary stimulus from global central banks supported global equity markets including the UK on Monday. Federal Reserve officials late on Friday highlighted the merits of the U.S. central bank's bond-buying programme, helping send Wall Street higher while sources in Japan said Tokyo was likely to nominate a proponent of aggressive monetary easing as its next central bank governor. Cyclical commodity stocks and banks , so-called as they are geared to the economic cycle, were the best UK performers on Monday. Stimulus spending by the Fed, alongside the European Central Bank, the Bank of England and others, has underpinned stock markets, with the FTSE 100 sitting near five-year highs. Traders cited some caution given elections in Italy as polls opened for the second day of voting on Monday, with a surge in protest votes fuelling fears of an unclear outcome that could hamper economic reform. Bunzl was in demand, up 1.6 percent, after the business supplies distributor unveiled a better than expected 5.8 percent rise in pretax profits, boosted by last year's record 272 million-pound spend on acquisitions. British education and media group Pearson, meanwhile, slipped 4.4 percent after saying it expects this year's earnings to be flat. Reckitt Benckiser (RB) topped the FTSE 100 fallers' list, off 4.1 percent, after the U.S. drugs regulator rejected its call for stricter packaging for its heroin addiction treatment, instead approving generic production for the drug. The British company's pharmaceuticals division makes most of its profit from Suboxone, a treatment containing buprenorphine, for recovering heroin addicts. "We expect this to be negative for the shares this morning and move (RB) to Sellers," Investec said in a note. "For us this is not just a question of increased Suboxone risk, but also one of how far and fast the implied rating on the core has risen, relative to the costs and risks of growth in OTC Health & Emerging markets, where RB lacks the scale of the likes of ULVR (Unilever ). (Reporting by Tricia Wright, additional reporting by David Brett; Editing by Susan Fenton) Link this Share this Digg this Email Reprints

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