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LONDON (Alliance News) - UK shares shot out of the blocks Friday in response to the Bank of Japan's announcement of additional economic stimulus, while International Consolidated Airlines Group and Royal Bank of Scotland Group trade well on the back of their respective earnings updates.
The FTSE 100 rose by 1.2% at the beginning of trade, and is up 1.1% at mid-morning to 6,537.17, the FTSE 250 is up 1.0% at 15,446.13, and the AIM All-Share lags behind, trading up 0.3% at 716.53.
European shares have had an even stronger morning session, with the CAC 40 in Paris up 1.9% and the DAX in Frankfurt up 1.6%.
The Bank of Japan surprised markets overnight by saying it will expand its quantitative easing programme at an annual pace of about JPY80 trillion. The earlier plan was to increase it by about JPY60-70 trillion.
Further bolstering investor sentiment, eurozone inflation rose slightly in October, as expected by economists, flash data from Eurostat showed. Inflation showed a 0.4% year-on-year growth, accelerating from 0.3% in September. Core inflation, which excludes energy, food, alcohol and tobacco, slowed to 0.7% year-on-year in October from 0.8% a month ago. It was forecast to remain unchanged at 0.8%.
"Finally a fragment of positivity has emerged from the eurozone, but the European Central Bank won?t be celebrating just yet. It was only a couple of months ago that it was forecasting inflation of 0.75% in Q4 and today?s very slight rise leaves it a long way off that," says Dennis de Jong, managing director at UFX.com.
"The poor recent data coming out of Germany is a massive worry for [ECB President] Mario Draghi and the stimulus measures introduced by the ECB are struggling to awaken the Eurozone from its comatose state," de Jong adds.
Precious metals markets are still are being spooked by a somewhat hawkish US Federal Reserve, having fallen to their lowest levels since 2010. Gold fell to a low of USD1,166.92 per ounce, the lowest it has been since July 2010, while silver fell to USD15.956 per ounce, its lowest price since February 2010.
Miners have been feeling the effects of the lower metal prices, with Fresnillo, down 2.1%, and Randgold Resources, down 1.9%, the two heaviest fallers in the FTSE 100, while African Barrick Gold, down 2.8% is amongst the worst performing stocks in the FTSE 250.
International Consolidated Airlines Group leads FTSE 100 gainers, rising 4.2% after it posted a rise in third quarter operating profit and revenue on a constant currency basis, with both British Airways and Iberia performing well in the quarter.
Operating profit for the group in the third quarter to September 30 was EUR900 million, up on the EUR690 million a year earlier. British Airways made an operating profit of EUR607 million, up from EUR477 million a year earlier. Iberia's operating profit rose to EUR162 million from EUR74 million.
Royal Bank of Scotland Group is the second-best performing stock in the blue-chip index, trading up 3.8%. The company reported a swing to third-quarter pretax profit, but results included hundreds of millions of pounds of litigation and conduct costs, relating to matters such as regulators' probe into the foreign exchange markets and a further charge taken for the payment protection insurance scandal.
Meanwhile, shares in SuperGroup have tumbled down 8.9% after the company issued a profit warning as the warmer weather in the UK hurt sales. In a surprise trading update, the FTSE 250 retailer said it would downgrade its full-year profit guidance to between GBP60 million and GBP65 million, down from the previous guidance of GBP67.1 million to GBP70.3 million.
The update echoes the concerns of other retailers such at Next, which cut its profit guidance on Wednesday after the balmy weather impacted its sales.
Regus shares have risen by 7.5% after it said its financial performance remained strong in the third quarter, despite sterling strength impacting its reported figures. The workplace provider said revenue in the third quarter to the end of September was GBP413.6 million, up from GBP386.6 million a year earlier, a 7% rise on a reported basis. On a constant currency basis, Regus said revenue rose 13.5%.
Still ahead on Friday is US income, consumption and spending data at 1230 GMT, Chicago purchasing managers' index for October, and Reuters/Michigan Consumer Sentiment Index for October, both to be released at 1445 GMT.
Futures indicate Wall Street for a strong open, with the DJIA pointed up 1.1%, the S&P 500 up 1.2% and the Nasdaq Composite up 1.5%.
By Neil Thakrar; neilthakrar@alliancenews.com
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