FTSE 100 preview: US boost for shares

By Reuters
Updated: 02:57 EDT, 28 April 2011

The FTSE 100 index is seen opening higher on Thursday, according to financial bookmakers, tracking gains on Wall Street and in Asia after the US Federal Reserve signalled it would not raise interest rates any time soon.

In the City: Traders head in to the long weekend on the up.

Fed Chairman Ben Bernanke said on Wednesday that the US central bank is in no rush to scale back its support for the economy with the labour market still in a 'very, very deep hole'.

The Fed trimmed its forecast for 2011 economic growth in a nod to a weak start to the year and bumped up its projections for inflation, and repeated it plans to keep overnight interest rates, which it has held near zero since December 2008, extraordinarily low for 'an extended period'.

The UK blue-chip index closed flat on Wednesday, down 1.20 points at 6,068.16, as investors awaited the Fed rate decision and Bernanke's news conference, which came after the London close.

On Wall Street, the Nasdaq jumped to a 10-year high as US stocks rallied on Wednesday after Ben Bernanke's first-ever press conference did nothing to short-circuit investors' optimistic outlook on the economy.

British consumer morale, however, unexpectedly deteriorated in April to its gloomiest since the UK was in the depths of recession, as people braced to take a hit from public spending cuts, a survey showed on Thursday.

The GfK NOP consumer confidence index fell to -31 in April from -28 in March, its lowest reading since February 2009, and confounding analysts' expectations for a steady reading.

No other British economic data is due for release on Thursday, so investors will be focused on a big batch of US pointers including the latest weekly jobless claims, first-quarter real GDP, and March pending home sales.

'Both fundamentals and technicals are working on all cylinders at this time, leading to the current strong surge in the FTSE,' said James A. Hyerczyk, analyst at Autochartist.

'Traders appear to be gaining confidence in the move as they continue to buy strength rather than wait for pull-backs. This could backfire as the market is coming close to being overbought.

'Investors should be careful about chasing the market at current levels. Watch for a possible closing price reversal top to signal the start of a near-term correction,' Hyerczyk added.

BHP Billiton would be interested in becoming a liquefied natural gas operator in the long term, its chief said in an Australian media interview, amid speculation the top global miner was eyeing Woodside Petroleum. Carnival is suing BP, Transocean, Cameron, and Haliburton over the Gulf of Mexico oil spill, The Daily Telegraph said.

British American Tobacco issues a first-quarter trading update. Also, BAT is facing questions over whether it was involved in covertly lobbying British MPs to persuade the government not to ban cigarettes from being displayed for sale in shops, The Guardian said.

There will be updates today from Astrazeneca, Shire, Unilever, BskyB, Hammerson, Segro, Whitbread, International Power and Standard Life.