BBA Share News (BBA)

LONDON (Alliance News) - Shares in London were higher Thursday midday, with commodities-related stocks benefiting from the weakness in the dollar after the US Federal Reserve held fire on Wednesday, but banks were suffering as the central bank suggested a slower pace of rate hikes in the US.

The FTSE 100 index was up 1.2%, or 81.36 points, at 6,916.13. The FTSE 250 was up 0.5% at 18,030.60, and the AIM All-Share was 0.4% higher at 814.39.

In mainland Europe on Thursday, the CAC 40 index in Paris and the DAX 30 in Frankfurt were up 1.9% and 2.0% higher, respectively.

In China, the Shanghai Composite ended up 0.5%, while the Hang Seng index in Hong Kong added 0.4%. The Tokyo market was closed for the Autumn Equinox holiday.

The Fed's Federal Open Market Committee decided to maintain its benchmark federal funds rate at 0.25-0.5%, pending signs of higher inflation and further strengthening of the labour market. However, the committee looks likely to press the 'lift' button before the end of 2016, based on individual members' projections issued on Wednesday.

14 of the FOMC's 17 participants believe the "appropriate target range" for the benchmark rate will be higher than 0.5% before the end the year. Similarly, 14 members said the key interest rates should top 1% by the end of 2017.

The next two-day FOMC meeting is due on November 2, six days before US presidential elections, making interest-rate changes unlikely for the Fed. The following meeting, which concludes on December 14, is seen as the likely date for Fed action.

While the Fed hinted to a rate hike later this year, the so-called 'dot plot' suggested that the speed of future rate rises will be slower than previously anticipated.

"The shift in the Fed's dot plot expectations from three to two hikes in 2017 is most telling. The 2015 dot plot indicated expectations of four hikes this year, and the big shift in expectations shows the committee is likely to implement higher rates at a much slower rate than previously forecast," noted IG analyst Joshua Mahony.

Stocks in New York are called for a positive open, with the Dow Industrials, the S&P 500 index and the Nasdaq 100 all pointed up 0.3%.

The dollar depreciated following the Fed's decision. The pound was quoted at USD1.3051 at midday compared to USD1.2968 at the close on Wednesday. The euro was at USD1.1231 against USD1.1151 on Wednesday.

Dollar-denominated commodities prices rose in response to the greenback's weakness, with gold at USD1,332.55 an ounce compared to USD1,326.50 an ounce on Wednesday, while Brent oil was quoted at USD47.25 against USD46.77 on Wednesday.

The best seven FTSE 100 performers were miners, led by BHP Billiton, up 4.7%, and Glencore, up 4.5%. Oil producers were also on the rise, with BP up 2.6% and Royal Dutch Shell 'A' shares 1.4% higher.

Banks weren't doing so well, with HSBC Holdings down 1.6% and Lloyds Banking Group down 0.2%. Low rates put pressure on lender's net interest margins, a key driver of profit. The FTSE 350 Banks sector was down 0.6%, the only sector index posting losses in London.

Rolls-Royce Holdings was recovering from losses seen at the open, up 0.8%, after the engine maker said it has appointed Stephen Dainith as its new chief financial officer, with plans for him to join in 2017. Dainith is currently the chief financial officer of Daily Mail & General Trust, the media group which owns the Daily Mail newspaper.

He will take over from David Smith at Rolls-Royce, who is leaving the company to "pursue other business interests". His exact departure date has not yet been confirmed.

Pearson was down 1.0% after Exane BNP cut the education publisher to Neutral from Outperform.

In the FTSE 250, BBA Aviation was up 2.9% after the aviation services company was initiated with an Overweight recommendation by Barclays.

Kier Group shares were 3.0% higher. The company, which focuses on the civil building and engineering sectors, said restructuring costs, along with an impairment charge for its two waste contracts, caused it to swing to a pretax loss in its recently completed financial year.

However, on an underlying basis, Kier said its pretax profit grew 45% to GBP125.0 million from GBP86.0 million, and the integration of Mouchel had been completed. Kier declared a full-year dividend of 64.50 pence per share, up 17% from the 55.20p per share offered a year earlier.

Drax Group was the worst mid-cap performer, down 4.2%, after the power generation company was cut to Underperform from Hold by Jefferies. The broker said the firm will suffer from lower power prices, expecting a decline of 10% by 2018.

Still in the financial calendar, US initial and continuing jobless claims are at 1330 BST. The eurozone consumer confidence index is at 1500 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2016 Alliance News Limited. All Rights Reserved.