FTSE 100 index holds near 14-1/2-year high, interest rate decisions in focus

Britains headline index was little changed in early trading on Thursday, having risen to the highest since early 2000 on Wednesday, as investors eagerly awaited ECB and BoEs interest rate decisions due later today.

FTSE 100 rose 0.17%, or 11.72 points, to 6,885.30 points by 8:33 GMT, having shifted in a daily range between 6 871.80 and 6 885.80 points. The blue-chip index surged to a 14-1/2-year high of 6 898.62 points on Wednesday and settled the day 0.65% higher at 6 873.58 points.

A report by the Chartered Institute of Purchasing & Supply showed on Wednesday that activity in Britains services sector expanded at the fastest rate in 10 months, with the corresponding Services PMI surging to 60.5 in August from 59.1 in July, defying projections for a drop to 58.5.

Meanwhile, the Eurozones services gauge showed a below-expectations expansion, which added to speculations the ECB might unveil additional immediate measures to fend off deflation. The single currency blocs services Purchasing Managers Index fell to 53.1 last month from 53.5 in July, mismatching expectations to remain flat. Retail sales also underperformed projections.

In the UK, Bank of England is expected to keep its benchmark interest rate at 0.5% at its policy meeting today. The ECB is also projected to keep borrowing costs unchanged, although speculations for the introduction of additional measures to battle deflation have arisen.

Global equities also drew some support from signs of easing tensions in eastern Ukraine. Russian President Vladimir Putin said yesterday he is hoping for a peace accord to be reached between Ukraine and pro-Russian separatists on Friday when they resume talks in Minsk. He urged both counterparts to cease military action in eastern Ukraine and proposed a seven-point peace plan, which includes pulling back troops, halting active offensive operations, full prisoner exchange, international monitoring of the process, opening a humanitarian corridor for refugees and aid delivery, restoration of destroyed infrastructure and prohibiting the use of military jets against civilians.

Ukrainian President Petro Poroshenko said he had agreed a ceasefire process with his Russian colleague. In a statement Mr. Poroshenko’s office said that their conversation resulted in an agreement on a process for ceasing fire in the Donbass region and that the two presidents reached a mutual understanding on steps leading to peace.

Apart from the crucial ECB and BoE monetary policy meetings, investors eyed upcoming employment data from the US for further signs of robust economic recovery. 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.

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, further supporting the possibility of an interest rate hike.

Top movers

FTSE 100s top gainers for the day were Standard Life Plc, Admiral Group Plc and Imperial Tobacco Group Plc.

Standard Life soared 8.86% to 420.20 pence by 8:23 GMT after Manulife Financial Corp announced on Wednesday it has agreed to acquire Standard Lifes Canadian business for $3.7 billion in cash.

Admiral Group rose 2.57% to trade at 1 296.50 pence, while Imperial Tobacco added 1.35% to 2 666.50 pence.

The headline indexs top three losers for the day were Hargreaves Lansdown Plc, CRH Plc and 3I Group Plc.

Hargreaves Lansdown slid 2.66% to 1 044.50 pence after shedding 5.79% on Wednesday. The company reported yesterday that its pretax profit missed analysts estimates.

CRH declined by 1.28% to trade at 1 427.50 pence at 8:30 GMT, while 3I Group stood at 388.05 pence, down 1.16% on the day.