The Bank of England's (BoE's) vote on maintaining its asset purchase programme proved to be a contentious issue last month and the news provided a boost to stock markets on Wednesday, as investors showed optimism that the central bank would increase quantitative easing measures at the next meeting.
June's vote on whether to beef up the BoE's asset purchase programme was closer than expected, with a 5-4 split on the Monetary Policy Committee (MPC) in favour of maintaining the status quo. The previous month the MPC had voted 7-1 in favour of leaving the QE pot at £325bn. This month, Paul Fisher argued for a £25bn increase while external committee members Adam Posen and David Miles were joined by Bank of England governor Mervyn King in voting for a £50bn increase.
"Most members judged that some further economic stimulus was either warranted immediately or would probably become warranted in order to meet the inflation target," the minutes said.
Nevertheless, markets were trading within a narrow range this morning, as investors await the outcome of the latest two-day meeting of the Federal Open Market Committee (FOMC). Investors are hoping that members will vote on further easing measures in light of recent mixed economic data and Eurozone concerns.
A close eye will be kept on Greece also, as party leaders attempt to form a coalition as early as today. Pasok socialist party leader Evangelos Venizelos has said that an agreement could be reached by midday.
FTSE 100: Insurers gain on Fitch comments
Insurance giant Aviva was on the rise after Fitch Ratings said that insurance companies are loss exposed than banks to contagion risk triggered by a Greek exit from the Eurozone "because of insurers' ability to share losses with policyholders and their lower reliance on short-term funding." Prudential, Legal & General and RSA Insurance were also making gains.
Heavyweight utilities stocks Severn Trent and United Utilities were heavy fallers after going ex-dividend; from today, investors will not have the right to their latest dividend payments.
ITV was extending gains after announcing a tender offer for up to £250m on Monday in an effort to reduce debt and cut future interest expense. Panmure Gordon said this morning that the action is "very welcome" and should see upgrades to consensus EPS estimates. Meanwhile, rumours that private equity firm Kohlberg Kravis Roberts (KKR) could be considering a bid for the terrestrial broadcaster could also be giving shares a lift today.
Accountancy software behemoth Sage Group rose after acquiring a 75% interest in Folhamatic Group, a provider of accounting, tax and payroll and regulatory content software in Brazil, for £125m. Investec upgraded its rating on the stock today from 'sell' to 'hold' after the shares surpassed its target price.
Investors celebrated Rio Tinto's plans to invest billions in two iron ore operations. The mining giant is investing $4.2bn in expanding operations in Western Australia and Guinea. The money is part of a $16bn investment programme that Rio has planned for 2012.
AstraZeneca fell after having successfully completed its acquisition of California-based biotechnology company Ardea Biosciences for $1.2bn.
Oilfield services group Petrofac dropped despite being declared as the selected bidder on the Pánuco integrated production service contract in Mexico.
Mid-cap movers: Aer Lingus flies sky high after Ryanair bid
Irish carrier Aer Lingus has told shareholders to do nothing and wait for advice from the board after rival Ryanair again staged to takeover bid for the airline. The latter has now made three unsolicited offers, with the latest valuing Aer Lingus at €694m. Aer Lingus was up 27% early on.
??European electrical goods retailer Kesa Electricals sank after saying that Chairman David Newlands is to be succeeded by the group's Senior Independent Director, Alan Parker. The news came as the group slashed its dividend following a sharp decline in profits in a year in which it disposed of its Comet retail chain for just £2 - and even then it had to pump in £30m of cash to persuade turnaround specialist OpCapita to take it off its hands.
FTSE 100 - Risers
Aviva (AV.) 276.30p +3.64%
Sage Group (SGE) 262.20p +3.43%
Hargreaves Lansdown (HL.) 512.00p +3.25%
Antofagasta (ANTO) 1,127.00p +2.83%
ITV (ITV) 76.30p +2.76%
Glencore International (GLEN) 337.90p +2.39%
Xstrata (XTA) 885.10p +2.34%
Schroders (SDR) 1,310.00p +2.34%
Rio Tinto (RIO) 3,122.50p +2.34%
Vedanta Resources (VED) 988.50p +2.33%
FTSE 100 - Fallers
Severn Trent (SVT) 1,645.00p -5.95%
Petrofac Ltd. (PFC) 1,467.00p -2.98%
United Utilities Group (UU.) 654.50p -2.24%
Unilever (ULVR) 2,037.00p -1.83%
Morrison (Wm) Supermarkets (MRW) 272.70p -1.30%
Reckitt Benckiser Group (RB.) 3,353.00p -1.30%
Aggreko (AGK) 2,062.00p -1.10%
Experian (EXPN) 928.00p -1.07%
Next (NXT) 3,171.00p -0.88%
Vodafone Group (VOD) 176.90p -0.84%
FTSE 250 - Risers
Daejan Holdings (DJAN) 2,689.00p +4.06%
Chemring Group (CHG) 304.60p +3.78%
Domino's Pizza Group (DOM) 505.50p +3.78%
Essar Energy (ESSR) 124.30p +3.50%
Homeserve (HSV) 158.90p +3.38%
National Express Group (NEX) 205.30p +3.17%
Halma (HLMA) 412.70p +3.07%
Phoenix Group Holdings (DI) (PHNX) 486.30p +3.05%
Senior (SNR) 192.90p +2.93%
Imagination Technologies Group (IMG) 469.40p +2.74%
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