Footsie rebounds from one-year low ahead of Fed's meeting on economy

FTSE: 5,164.92 (+95.97) Mid-250: 10,090.50 (+228.53) Small-Cap: 2,887.75 (+1.34)UK STOCKS climbed from a one-year low yesterday, snapping the longest streak of losses since January 2009, amid speculation the Federal Reserve will pledge more stimulus to help boost economic growth.

The FTSE 100 rose 1.9 per cent at the close in London after plunging as much as 5.5 per cent earlier.

The gauge has still fallen 15 per cent from this year’s high in February.

“We now need to see investors react well to what the Fed does tonight,” said Joshua Raymond, chief market strategist at City Index in London. “There is every chance that this could give the markets a fillip to see a bit of bounce back. Now is the time for the market to see how the Fed is planning to maintain US growth.”

Fed chairman Ben Bernanke and policy makers are holding a one-day meeting as the unprecedented downgrade of the US’s top credit rating by Standard and Poor’s fuelled concern about the economy.

Speculation has grown that the central bank will initiate a third round of emergency stimulus measures, known as QE3, to prop up growth.

“Investors are really taking their cue from macroeconomics and the outlook on global growth,” said Colin McLean, chief executive officer at SVM Asset Management in Edinburgh. “The speed of the moves down has left private investors unwilling to sell where we are now. We haven’t seen any redemption pressure at all, which is encouraging.”

Antofagasta led mining companies higher, climbing 6.1 per cent to 1,205p as metals advanced in London.

Xstrata gained 7.4 per cent to 1,042p and Rio Tinto soaring 4.7 per cent to 3,548p.

The FTSE 350 Mining Index climbed 3.9 per cent.

InterContinental Hotels rose 8.2 per cent to 1,042p, rebounding from a five-day retreat. The owner of the Holiday Inn brand reported a 23 per cent gain in first-half earnings.

ARM, the designer of chips for Apple’s iPhone, paced technology shares higher, rallying 7.7 per cent to 499.5p.

Cairn Energy jumped 8.2 per cent to 307.6p as crude oil gained in New York.

BG climbed 4.1 per cent to 1,237.5p and Royal Dutch Shell, Europe’s largest oil company, gained 2.6 per cent to 1,939p. – (Bloomberg)