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LONDON (Alliance News) - Stocks in the UK were notably higher Wednesday midday following the dovish comments Tuesday by US Federal Reserve Chair Janet Yellen, with miners and oil stocks pushing higher as commodities prices rose while the dollar weakened.

"Yellen's speech has enlivened what threatened to be a dull few days. Markets had been looking to mark time until the end of the quarter at least, but Yellen evidently had other plans," said IG analyst Chris Beauchamp. "Her speech was taken as notably dovish, cancelling out some of the 'April hike' calls from the previous week, with the usual reaction of a falling US dollar".

In prepared remarks on Tuesday after the London stock market close, the Fed Chair said she considers it appropriate for the central bank to proceed cautiously in adjusting monetary policy given the risks to the economic outlook. Yellen said the caution is especially warranted because the Fed's ability to use conventional monetary policy to respond to economic disturbances is limited with interest rates still at such low levels.

The pound traded the greenback at USD1.4404 at midday versus USD1.4271 at the close Tuesday, while the euro was at USD1.1312 against USD1.1189 on Tuesday.

As the dollar fell, commodities prices surged, with gold quoted at USD1,236.75 at midday, having stood at USD1,225.74 at the London close Tuesday. The North Sea benchmark Brent oil price similarly was higher, though still below the USD40 line. Brent was at USD39.69 a barrel at midday, compared to USD38.84 at the close Tuesday.

"If the move in oil and equities can be sustained, there is a good chance that bulls will run with this theme far into April and beyond, and perhaps we'll also start to see real inflows to equity funds, so far the missing piece in the puzzle," noted IG's Beauchamp.

The Investment Association, whose members collectively manage over GBP5.5 trillion on behalf of clients, said on Wednesday there was a GBP399 million net retail outflow from UK authorised investment funds in February. Conversely, institutional sales showed a net inflow of GBP118 million that month.

The FTSE 100 in London was up 1.8% Wednesday midday, or 106.68 points, at 6,212.58. Anglo American, up 10%, and Glencore, up 7.1%, were the best performing miners, while BP was up 3.8% and Royal Dutch Shell's 'A' shares were up 3.5%.

Amid the rally in oil prices, investors will keep a close eye on US Energy Information Administration oil stocks, due at 1530 BST. Expectations are for a 3.1 million barrels surge, compared to the 9.3 million barrels rise from last week. Also ahead in the economic calendar, US ADP employment is at 1315 BST. German inflation figures are due at 1300 BST.

In Europe, the CAC 40 in Paris was up 2.0% and the DAX 30 in Frankfurt was up 1.8%

Meanwhile, in New York, stocks were expected to add to the gains from Tuesday, with both the Dow Jones Industrial Average and the S&P 500 around their highest levels of 2016. The Dow and the S&P both were called up 0.6% and the Nasdaq 100 was pointed up 0.8%.

Elsewhere in London, GlaxoSmithKline was up 1.4% after CitiGroup upgraded the FTSE 100 drugmaker to Buy from Neutral.

Fellow blue-chip Marks & Spencer Group was up 0.1%, having taken back earlier losses after Jefferies cut the food and clothing retailer to Hold from Buy. Meanwhile, Jefferies upgraded Next to Hold from Underperform, sending the fashion and homewares retailer's shares up 0.1%.

The FTSE 250 was up 1.4% at 16.992.06, while the AIM All-Share was up 0.2% at 709.89.

Shares in mid-cap gold miner Centamin, up 4.7%, were supported by an upgrade to Add from Hold by Numis. The broker said the change to its recommendation comes following a recent decline in the stock.

Bookie William Hill was at the bottom of the mid-cap index, down 1.6%, with its shares suffering after a downgrade to Underweight from Equalweight by Morgan Stanley.

Homewares retailer Dunelm Group, down 1.5%, after Jefferies cut it to Hold from Buy.

In London Main Market, Premier Foods rose after receiving an improved takeover offer from McCormick & Co. The US spices and flavourings group offered 65.00 pence per share, valuing Premier Foods at GBP536.7 million. The stock closed Tuesday in London at 56.50p for a GBP476.0 million market capitalisation. Wednesday midday, Premier Foods was up 5.6% to 59.66p.

The new cash offer comes after Premier Foods, the maker of Mr Kipling cakes and Bisto gravy, had rejected two previous bids from McCormick ahead of a key shareholder, Warburg Pincus, selling a 17% stake to Japanese noodle maker Nissin Foods Co instead.

McCormick on Wednesday called on Premier Foods to engage with the offer, arguing it provides shareholders with the opportunity of a cash exit from their holdings at a full valuation of the company.

By Daniel Ruiz; danielruiz@alliancenews.com

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