FTSE 100 preview: Fed QE to boost shares

By Reuters
Updated: 03:41 EDT, 4 November 2010

The FTSE 100 is expected to rise after the Federal Reserve unveiled a larger-than-expected plan to buy assets to shore up a struggling US economy.

Ready, Feddy, go: Shares should climb after the Fed decision.

The UK blue chip index looks set to rise 33 to 38 points, or as much as 0.7%, according to financial bookmakers, after it ended 8.46 points, or 0.2%, lower at 5,748.97 on Wednesday.

US stocks ended a volatile session slightly higher on Wednesday after the Fed launched a fresh effort to support the US economic recovery, committing to buy $600bn in government bonds despite concerns the programme could do more harm than good.

Both the Dow and Nasdaq closed at levels not seen since 2008 while the S&P ended at a six-month high. And Asian stocks rose to their highest levels since June 2008 after the Fed's move.

The US central bank said it would buy about $75bn in longer-term Treasury bonds per month through the end of June 2011 and could adjust purchases depending on the strength of the recovery.

Investors were waiting for Bank of England decisions on interest rates and quantitative easing (QE), due at noon.

The BoE is likely to reject a new bout of QE, keeping policy on hold and eschewing the Fed's path of more economic stimulus.

On the other side of the Atlantic, US weekly jobless claims data are due, ahead of Friday's key US non-farm payrolls data.

Canada blocked BHP Billiton's audacious $39bn bid for Potash Corp and left little room for a modified offer, throwing the spotlight on how the world's largest miner can find new avenues for growth.

There will be results today from Man Group, WM Morrison, Old Mutual, RSA Insurance, Unilever, Rathbone Brothers, Millenium & Copthorne Hotels, Meggitt, Redrow, Spirent Communications, Synergy Health, Tate & Lyle, BTG, Cable & Wireless, Easyjet and JD Wetherspoon.