FTSE jumps in light volumes after BoE statement

Thu Jul 4, 2013 8:06am EDT

* FTSE 100 up 1.9 pct after BoE statement

* Banks, oils, miners see strong gains

* EasyJet firms; update shows passenger growth

By Tricia Wright

LONDON, July 4 (Reuters) - Britain's blue chip shares lurched higher on Thursday, led by cyclical banking, oil and mining stocks, after the Bank of England indicated that there were no near-term prospects for monetary policy tightening.

The FTSE 100 was up 116.95 points, or 1.9 percent, at 6,346.82 by 1154 GMT, bouncing back after sliding 1.2 percent on Wednesday.

Banks, oils and miners hoisted the index higher with gains of 1.4-2.7 percent after the BoE said that a recent rise in bond yields was not warranted by the state of the British economy.

The BoE left interest rates and quantitative easing unchanged at the first meeting presided by new chief Mark Carney, but surprised markets by issuing a statement. The European Central Bank also held rates.

"(The BoE) flagged looser monetary policy and that's good for stock markets. But these are low volumes; I'm not really going to read too much into it," Michael Hewson, analyst at CMC Markets, said.

Trading volume stood at just 33 percent of the 90-day daily average, reflecting a reluctance by investors to get too involved in equities ahead of Friday's keenly watched U.S. jobs report, and with U.S. markets shut for a national holiday.

"We remain on the sidelines for FTSE trading until we see what number comes out tomorrow," Shai Heffetz, MD of spreadbetting and CFD provider InterTrader, said.

Low-cost carrier easyJet was the star performer with a 3.9 percent rise after announcing a 1.9 percent increase in passenger numbers in June.

While unrest in Egypt and a resurfacing of debt concerns in both Greece and Portugal have unnerved investors in the past few days, unleashing volatility into markets, fund managers remain sanguine about the propsects for equities.

"I think today's move shows that there's still money coming in. We're still positive on (equity) markets," Colin Mclean, SVM Asset Management managing director, said.

"The bigger cap stocks (with an exposure to) the more mature markets - particularly the U.S. - I think people are still underinvested in those," he said, holding this view partly on the back of more encouraging recent U.S. economic data.

Of UK-listed stocks with strong exposure to the United States, McLean reckoned there is still good value in equipment hire group Ashtead, plumbing supplies group Wolseley and credit-checker Experian. (Editing by Susan Fenton)

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