LONDON (Alliance News) - London's main equity indices ended the day higher Thursday, with the small-cap AIM index hitting another higher for the year, after the Bank of England and European Central Bank failed to throw up any surprises and economic data from developed countries continued to come in strong.
The day's trading had been volatile, with the main indices swinging between losses and gains, but the the FTSE 100 closed up 0.9% at 6,532.44, the FTSE 250 up 0.9% at 14,977.34 and the AIM All-Share up 0.5% at 764.54.
The markets had opened higher, taking a lead from a higher close in the US and gains on Asian markets overnight.
The Bank of Japan decided to keep its monetary easing program unchanged after a two-day meeting of its Policy Board, but it revised up its assessment of the economy, saying that the economy is recovering.
Both the BoE and ECB kept benchmark interest rates unchanged at 0.5%.
There was no statement from the UK central bank as Mark Carney headed to the G20 meeting in his capacity as current head of the Financial Stability Board, but both the euro and the pound slipped from the highs of the day against the dollar as Mario Draghi gave his conference at the ECB.
Draghi confessed that a possible cut to the benchmark interest rate had been discussed and that downside risks remain to the eurozone recovery in the form of renewed geopolitical tensions and ongoing unemployment in the region.
The pound had broken above USD1.56, recording a high of USD1.5667, after the BoE decision and on the back of strong macro data showing UK new car sales at pre-recessions levels after increasing for the 18th consecutive month. 10-year Gilt yields went above 3%, a high since July 20111, as traders increasingly price in nearer term rate rises than the BoE forecasts.
The UK car sales data, which followed very strong data from the US car market overnight, meant the FTSE 350 Auto & Parts sector index made the biggest gains Thursday, while airline stocks also did well as they rebounded from the big losses caused by Ryanair's profit warning Wednesday. Dublin-listed Ryanair and London-listed rival easyJet both posted strong passenger number and load factor gains in August. EasyJet closed the day 1.8% higher, while International Consolidated Airline Group finished up 2.9%.
US non-farm Payrolls and unemployment date, due at 1330 BST, will be akey driver Friday. Expectation is for an increase in payrolls to 181,000, from 162,000 previously, and for unchanged headline unemployment at 7.4%. Any surprise drop in unemployment is likely to stoke fears the Fed will start tapering its economic stimulus programmes sooner rather than later, and drive stocks lower globaly. Investors will also be watching for any news on a possible military strike on Syria as G20 leaders continue their annual meeting in Russia.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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