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(Alliance News) - Stocks in London ended higher on Friday as investors appeared to brush aside fears of a shift in policy from the US Federal Reserve as lawmakers in Washington reached a deal on an infrastructure spending package.
The Bank of England on Thursday became the latest major central bank to maintain ultra-low interest rates, echoing the views of the US Federal Reserve and its fellow institution in the eurozone that inflationary spikes are only temporary.
The FTSE 100 index closed up 26.10 points, or 0.4%, at 7,136.07 - the blue chip index lost 0.2% this week.
The mid-cap FTSE 250 index ended 135.89 points higher, or 0.6%, at 22,646.01 - resulting in the benchmark gaining 0.4% over the past 5 days.
The AIM All-Share index closed up 11.68 points, or 0.9% at 1,250.16 - ending the week up 0.7%.
The Cboe UK 100 index closed up 0.3% at 710.50. The Cboe 250 ended up 0.4% at 20,317.20, and the Cboe Small Companies gained 0.4% at 15,391.90.
In Paris the CAC 40 ended up 0.1%, while the DAX 30 in Frankfurt ended 0.1% lower.
"European markets are more mixed, but the FTSE 100 sits in positive territory once more as it steadily recoups last week's losses; what has been remarkable is how indices globally have shrugged off the Fed's apparent change of outlook (which has been careful walked back to an extent this week), and have resumed the march higher, presumably following the dangling carrot of economic growth as the world returns to normal," said IG Group's Chris Beauchamp.
In the FTSE 100, JD Sports Fashion ended the best performer, up 4.4%, in a positive read-across from blowout earnings from athletic apparel maker Nike. In addition, Adidas rose 6.1%, ending as Frankfurt's best-performing large-cap stock.
On Thursday, Nike said revenue in the three months to May 31, rose by 96% to USD12.3 billion. Net income was USD1.5 billion, a swing from a loss of USD790 million a year ago.
Nike shares were up 14% in New York.
WPP ended up 2.3% after Credit Suisse raised the advertising firm to Neutral from Underperform.
CRH finished 2.1% higher after Berenberg upgraded the Irish building materials firm to Buy from Hold.
Ashtead closed up 2.1% driven by anticipation of another injection of federal spending into the US economy, after President Joe Biden on Thursday said a deal had been reached with a bipartisan group of lawmakers to spend nearly USD1 trillion on infrastructure. Ashtead generates a bulk of its revenue in the US via its Sunbelt arm.
In the FTSE 250, Ultra Electronics ended the best performer, up 6.7%, after Cobham Group confirmed that it is currently considering a possible combination with Ultra with a view of creating "a global defence electronics champion".
The pound was quoted at USD1.3910 at the London equities close, marginally higher from USD1.3900 at the close Thursday.
The euro stood at USD1.1945 at the European equities close, up from USD1.1930 late Thursday. Against the yen, the dollar was trading at JPY110.75, down from JPY110.86 late Thursday.
Stocks in New York were mostly higher at the London equities close after US personal consumption expenditure figures missed market forecasts and on the Biden administration's infrastructure deal agreement.
The DJIA was up 0.6%, the S&P 500 index up 0.2%, but the Nasdaq Composite was down 0.1%.
On the economic front, US personal consumption expenditures accelerated at a marginally slower pace than expected in May, according to figures on Friday.
The data was released amid a backdrop of inflationary fears, which have been in focus in recent weeks and months.
Numbers from the US Bureau of Economic Analysis, part of the Department of Commerce, showed the PCE price index jumped 3.9% annually in May, a hair below consensus estimates for 4% growth. In April, the index rose 3.6% annually.
Excluding food and energy, annual PCE inflation picked up pace to 3.4%, from 3.1% in April. May's figure was in line with expectations, according to consensus cited by FXStreet.
On a monthly basis, the PCE index rose 0.4% in May, slowed from April's 0.6% hike and below market forecasts of a 0.3% rise.
Ben Laidler, global markets strategist at eToro, said: "The favourite US inflation measure of the Federal Reserve showed a smaller than expected rise to 3.9% year-on-year, easing the mounting pressures on the Fed to tighten monetary policy, bolstering the outlook for only a 'transitory' inflation increase, and supporting further equity market gains... Consensus says this is the year-on-year 'peak' of the recent inflation spike which the Fed continues to see as 'transitory'.
"Investors will be relieved given the recent surge in inflation and signs of a more 'hawkish' Fed stance. Strong GDP growth combined with somewhat less inflation pressure is a positive for equity markets, especially cyclical segments such as commodities and financials."
Brent oil was quoted at USD75.81 a barrel at the equities close, up from USD75.50 at the close Thursday.
Gold was quoted at USD1,781.20 an ounce at the London equities close, firm against USD1,779.00 late Thursday.
The economic events calendar on Monday has Germany import prices at 0700 BST and Ireland retail sales at 1100 BST.
The UK corporate calendar on Monday has trading statements from Petrofac and from Anglo-Eastern Plantations.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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