LONDON (Alliance News) - Stocks in London were higher on Thursday morning, with miners benefiting the most from rising commodities prices, as the dollar weakened after the Fed kept US interest rates on hold, but strongly hinted at a rate hike before the end of the year.
The FTSE 100 index was up 0.5%, or 36.18 points, at 6,870.95. The FTSE 250 was up 0.5% at 18,019.90 and the AIM All-Share was 0.2% higher at 813.31.
The Fed looks likely to raise its key interest rate before the end of 2016, based on individual members' projections issued on Wednesday. The Fed refrained from taking immediate action, as the 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, 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.
"Mixed messages saw the market expectations of a December hike rise, whereas the dot plot suggested that the speed of future rate rises will be slower than previously anticipated; down to two from three for 2017," noted analysts at IG. "The main effect of this in the markets seems to be dollar depreciation".
The pound quoted at USD1.3069 after the London equities open on Thursday, compared to USD1.2968 at the close on Wednesday. The euro stood at USD1.1234 against USD1.1151 on Wednesday.
US stock investors welcomed the Fed's decision on Wednesday, with the Dow Industrials ending up 0.9%, while the S&P 500 index and the Nasdaq Composite both rose 1.0%.
In mainland Europe on Thursday, the CAC 40 index in Paris and the DAX 30 in Frankfurt were up 0.9% and 1.0% higher, respectively.
In China, the Shanghai Composite ended up 0.5%, while the Hang Seng index in Hong Kong is up 0.4%. The Tokyo market was closed for the Autumn Equinox holiday.
Dollar-denominated commodities prices rose in response to the greenback's weakness, with gold at USD1,333.23 an ounce compared to USD1,326.50 an ounce on Wednesday, while Brent oil is quoted at USD47.26 against USD46.77 on Wednesday.
The best seven FTSE 100 performers were miners, led by BHP Billiton, up 4.5%, Polymetal International, up 3.7%, Fresnillo, up 3.6% and Anglo American, up 3.1%. Oil producers were also on the rise, with BP up 1.5% and Royal Dutch Shell 'A' shares 1.2% higher.
Rolls-Royce was down 1.2% 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 the worst blue-chip performer, down 2.0% after Exane BNP cut the education publisher to Neutral from Outperform.
Centrica shares were 0.9% lower after Jefferies cut the British Gas-owner to Underperform from Buy.
In the FTSE 250, Kier Group was the biggest mid-cap gainer, up 3.0%. 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.
Kier said its pretax loss for the year to the end of June was GBP15.4 million, compared to a profit of GBP39.5 million the year earlier, despite revenue rising to GBP4.21 billion from GBP3.35 billion.
However, on an underlying basis, Kier said its pretax profit grew 45% to GBP125.0 million from GBP86.0 million, and it said 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.
In the economic calendar on Thursday, the UK CBI industrial trends survey is at 1100 BST. In the 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
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