The FTSE 100 Report

FTSE 100: Volumes remain low but index maintains gains ahead of an expected ECB refi rate cut

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Category: The FTSE 100 Report

Published on Thursday, 08 December 2011 10:14

Written by Will Peters

Elsewhere on the economic front, we have the latest weekly US jobless claims data out at lunchtime.

The FTSE 100 (INDEXFTSE:UKX) is 0.28% higher on the day at 5,562.61 at 9:54AM.

"Despite the low volumes, equities are trading firmly in positive territory ahead of key interest rate decisions.  While the Bank of England is likely to maintain the status quo and keep interest rates and its asset purchase target unchanged, the game changer could come from the European Central Bank," says Manoj Ladwa, Senior Trader at spread bet company ETX Capital. 



Traders are factoring in at least a 25 basis point cut by the ECB and will be watching closely for any other measures to free up the lending market.  

"The FTSE 100 was called to open higher this morning with investors now awaiting the outcomes of interest rate decisions from both the Bank of England and the ECB ahead of tomorrow's EU summit," says a morning note from SVS Securities.

Elsewhere on the economic front, we have the latest weekly US jobless claims data out at lunchtime.

On the foreign exchanges, the major currencies continue to trade in narrow ranges ahead of the outcome of the meetings today and tomorrow. Commodity prices are slightly better but sentiment is likely to remain cautious until there are developments from both the above meetings.

On the FTSE 100 corporate front a Standard Chartered Pre-Close Trading Update reports that income for 2011 is now expected to grow at just below a double digit rate but anticipates double digit growth in PBT for the group.

Asset quality remains good and loan impairment for the full year is expected to be below the level seen in 2010. It added that it remains 'strongly capitalised' and its core tier 1 ratio for 2011 is expected to be slightly below the level seen at H1 partly due to the impact of recent Asian currency depreciation.

Tesco IMS reports that group sales rose 7.2% in Q3 helped by its international business, the rise in petrol prices and the contribution from newly opened stores.

 However, UK same-store sales fell 0.9% when petrol and VAT are excluded. It added that it was performing broadly in line with expectations and the outlook for the year as a whole remains unchanged, ahead of the important seasonal trading period.