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FTSE 100 Index reaches five-week high after Fed leaves interest rates unchanged

Published 22/09/2016

The UK's top tier index rose 1.1% or 76.63 points to 6911.4 points
The UK's top tier index rose 1.1% or 76.63 points to 6911.4 points

The FTSE 100 soared to five-week highs as global markets cheered the US Federal Reserve's decision to hold interest rates.

The UK's top tier index rose 1.1% or 76.63 points to 6911.4 points, its highest level since mid-August when the FTSE 100 reached 2016 highs.

A weaker dollar in the wake of the Fed's interest rate announcement drove sterling higher by 0.4% to 1.309 against the greenback.

The pound was flat against the euro at 1.165.

Global markets celebrated the US central bank's decision to keep the target range for interest rates on hold at 0.25% to 0.5%.

Jasper Lawler, a markets analyst at CMC Markets, said: "The underlying message from the Federal Reserve was received loud and clear across global markets: 'We're still not hiking interest rates so go ahead and take some risk.'

"The risk-taking sentiment was evident in a rise in equities and commodities and a drop in the US dollar."

Still, experts deemed the decision a "hawkish hold", with the rate-setting committee voting six to three in support of keeping rates steady.

UK markets were also buoyed by the latest CBI Industrial Trends Survey, which showed manufacturing output holding firm in the three months to September.

Across Europe, the German Dax closed 2.3% higher, mirroring the 2.3% rise by the French Cac 40.

In oil markets, Brent crude was up around 1.1% to 47.59 US dollars per barrel, with investors still cheering news of a bigger-than-expected drop in US crude oil inventories. The weaker US dollar also helped support crude prices.

It sent commodity-linked stocks to the top of the FTSE 100, with Glencore up 10.8p at 207.9p, Fresnillo up 89p at 1802p, Randgold up 335p to 8015p, and Antofagasta up 21.4p to 517.5p.

Rolls-Royce shares were down 7p to 733p after the company announced the departure of chief financial office David Smith. He is set to be replaced by Stephen Daintith, the current finance chief at newspaper publisher Daily Mail & General Trust.

Mr Smith, who was in the job for three years, is leaving to "pursue other business interests".

Away from the top-tier index, Mitchells & Butlers, owner of All Bar One and Harvester, welcomed a turnaround in trading with a 1.8% rise in like-for-like sales for the eight weeks to September 17, thanks to a bout of warm weather.

Mitchells & Butlers shares closed higher by 6.9p to 272p.

Countrywide shares fell 7.2p to 219.1p after announcing it had sold the remaining stake in property website Zoopla for £29.2 million.

The move comes after Countrywide sold almost half its 4.1% Zoopla shareholding in February for £19.1 million, having already offloaded a 2.2% stake at the time of Zoopla's stock market flotation in 2014.

The biggest risers on the FTSE 100 were Glencore up 10.8p at 207.9p, Fresnillo up 89p at 1802p, Randgold up 335p to 8015p, and Antofagasta up 21.4p to 517.5p.

The biggest losers on the FTSE 100 were HSBC down 11.4p at 577.3p, Informa down 9.5p at 721p, Shire down 56p at 5189p, and Pearson down 8p at 774p.

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