FTSE 100 rises ahead of interest rate decisions

Britains headline equity index rose to a 3-1/2-month high on Wednesday, led by Ashtead Group, with investors eyeing tomorrows interest rate decisions by the ECB and BoE which stand a considerable chance of deviating from expectations.

FTSE 100 was up 0.86%, or 58.53 points, at 6 887.70 points at 8:11 GMT, having shifted in a daily range between 6 840.70 and 6 890.20 points, the highest since May 15th. The blue-chip index added 0.06% on Tuesday to close at 6 829.17 points.

Investors eyed Thursdays interest rate decisions. Market participants are ambivalent whether the ECB will introduce immediate stimulus steps to fend off deflation. Meanwhile, BoE Governor Mark Carney lost consensus among his policy makers last month on whether the central bank should raise its benchmark interest rate from the record low 0.5%. Minutes of the August 6-7 meeting showed two of the committees members calling for an interest rate hike, while the remaining seven, including Carney, voted for no change.

A report by the Chartered Institute of Purchasing & Supply is expected to show that activity in the UK services sector grew at a slower pace in August, compared to July. The corresponding Services PMI is projected to register at 58.5, down from 59.1 in July. If confirmed, this would be the sectors 20th straight month of expansion.

Data yesterday showed that manufacturing activity in the United States surged in August, with the ISM Manufacturing PMI coming in at a nearly 3-1/2-year high of 59.0 in August after construction spending rebounded in July. This sharply exceeded analysts’ estimates for a drop to 56.8 from July’s high of 57.1.

Market players also eyed upcoming key US economic data. On Wednesday, July’s factory orders are projected to have risen by 11% on a monthly basis. Due out on Thursday are initial jobless claims for the week ended August 30th, expected to have risen by 2 000 to 300 000, while Automatic Data Processing will likely report that US employers added 220 000 jobs in August. The US trade deficit is expected to have widened to $42.2 billion in July from $41.54 billion a month earlier. Additionally, activity in the US services sector probably grew at a slower pace in August, with the corresponding ISM Non-Manufacturing PMI projected to register at 57.6 from 58.7 in July.

On Friday, the US Labor Department is expected to report that US employers added 225 000 people to payrolls in August, which would be the sixth straight month of job creation above 200 000, while the unemployment rate likely slid to 6.1% from 6.2% in July.

Corporate news, top movers

Todays three top gainers were Ashtead Group Plc, Weir Group Plc and International Consolidated Airlines Group SA.

Ashtead rose by 2.94% to trade at 1 015.50 pence per share by 7:56 GMT. The industrial equipment hire group raised its full-year guidance after posting a 33% jump in first-quarter pre-tax profit due to strong demand in the US and UK.

Weir Group jumped 1.92% to 2 758.00 pence. Credit Suisse Group AG raised the companys stock status to outperform from neutral amid expectations that improving oil-and-gas and mining markets will raise profits. IAG jumped by 2.39% to 373.40 pence.

The indexs top three losers for the day were Hargreaves Lansdown Plc, BHP Billiton Ltd and Admiral Group Plc.

Hargreaves Lansdown Plc plunged 2.28% to trade at 1 113.00 pence at 8:02 GMT. The company said its total assets under administration climbed 29% at £46.9 billion and announced a total dividend of 32 pence per share.

BHP Billiton fell by 0.74% to 1 905.75 pence by 8:09 GMT, while Admiral was trading 0.72% lower at 1 315.50 pence.