Reuters: Hot Stocks: FTSE rallies on Fed's decision to maintain stimulus

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FTSE rallies on Fed's decision to maintain stimulus Sep 19th 2013, 08:01 Thu Sep 19, 2013 4:01am EDT * FTSE 100 index surges 1.4 percent * Fed's decision not to cut stimulus boosts cyclicals * Miners, banks top gainers' list, Randgold jumps 10 pct By Atul Prakash LONDON, Sept 19 (Reuters) - Britain's top share index bounced back in early trading on Thursday, with the U.S. central bank's decision to delay a reduction in its monetary stimulus boosting investors' appetite for riskier assets. The FTSE 100 index tracked a rally in global equities after the U.S. Federal Reserve surprised markets late on Wednesday by saying it wanted to wait for more evidence of solid economic growth before trimming its bond purchases, which have helped equity markets across the globe to set new highs. "With the Fed holding back on tapering, this could be the impetus the markets needs to retest recent highs," John Truong, senior trader at Accendo Markets, said. "High beta stocks such as miners and financials will continue to do well in the current environment, which is favourable for risk assets." The UK mining index surged 3.5 percent to become the best performing sector, led by a 10 percent rally in Randgold Resources and a 9 percent jump in Fresnillo . Banks, up 1.3 percent, were supported by a 3.3 percent gain in Standard Chartered. At 0733 GMT, the blue chip British stock index was up 93.96 points, or 1.4 percent, at 6,652.78 points after falling in the previous two sessions. It is up nearly 13 percent this year. "As long as monetary policy remains loose, it's likely to be positive for equities," James Butterfill, global equity strategist at Coutts, said. "Since April, we have seen an outperformance in cyclicals and we believe that's going to continue. Our favourite sectors right now are mining, technology and energy." Investors will keep a close eye on macroeconomic data for hints about the market's near-term direction. UK retail sales numbers are due at 0830 GMT, while U.S. first-time claims for jobless benefits come later in the session. Focus will continue to be on the U.S. figures as the Fed's move to start scaling back its monetary stimulus at a later stage would be dependent on the pace of recovery in the world's largest economy. For now, the U.S. central bank's decision of not disrupting its asset purchases has cheered investors. "The actions of the Fed, or rather the lack of action, may be similar to a rate cut. The sectors that typically perform well in those periods are the more cyclical, whilst the more defensive sectors tend to underperform," Gerard Lane, equity strategist at Shore Capital, said in a note. (Reporting by Atul Prakash; Editing by Toby Chopra) Link this Share this Digg this Email Reprints

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