Fed announces new stimulus plan

US stocks climbed to session highs yesterday after the Federal Reserve announced a new stimulus plan at the end of its two-day monetary policy meeting.

The news from the US did not come in time for European stocks, which closed little changed.

The UK’s FTSE 100 gained 0.2 per cent, while France’s Cac 40 slipped 0.1 per cent. Germany’s Dax rose 0.3 per cent.

The Iseq index of Irish shares closed at 3,342.48, a fall of 0.40 per cent.

DUBLIN

Volumes were light and traders said the gradual fall off in trading in the run-up to the Christmas break was well under way. The slight fall in the Iseq was the result of multiple small slips in share prices on a day that had little by way of market news.

The largest stock on the exchange, CRH, closed at €14.46, a fall of 0.62 per cent.

Kingspan, Paddy Power, Ryanair and CC were among other stocks that ended the session down – off, respectively, 0.56 per cent, 0.20 per cent, 0.54 per cent, and 0.67 per cent.

Builders merchant and DIY group Grafton managed to beat the trend, closing at €3.68, a rise of 1.35 per cent. There was strong demand for the stock on the back of European construction analysis that saw Ireland looking positive in contrast with many of the continent’s jurisdictions.

It is the latest in a series of announcements and developments that may indicate a possible upturn in the Dublin construction market, where Grafton has a strong presence.

Smurfit had a good day, ending up 2.94 per cent, at €9.54, with the movement to do with technical matters related to index trading. Tullow Oil rose by 1.84 per cent, to close at €14.53, with newspaper speculation about a possible move on the company being behind the rise, according to traders.

LONDON

Britain’s top share index closed at a nine month high, led by an energy sector buoyed by hopes that the US Federal Reserve would continue to provide stimulus for the world’s biggest economy.

Oil and gas and basic materials, which rise and fall with optimism over the economic outlook, combined to added over 13 points to the FTSE. The materials sector also prospered, with miner Anglo American among the FTSE 100 leaders, ahead by 2.7 per cent as it was lifted by a Barclays upgrade to equal weight from underweight.

EUROPE

Peripheral euro zone indexes helped European shares edge upwards, steadying after three weeks of gains but retaining the potential to rise more in the short term as macroeconomic risks fade.

Investors went in search of value such as basic resources and insurers, which outperformed more highly valued defensive sectors such as heatlhcare and food and beverage.

Troubled French car maker PSA Peugeot Citroen surged 10.1 per cent, boosted by a report on La Tribune website saying the government of Algeria could buy a stake in the company. Traders also mentioned a recent move by UK hedge fund Marshall Wace to reduce its short selling position on Peugeot, which has been in the crosshairs of short sellers for months.

NEW YORK

US stocks rose for a sixth day, the longest rally since August, while the dollar weakened after the Federal Reserve announced plans to buy more Treasuries to boost growth.

The announcement eased concern about the effects on the economy from potential federal budget cuts and tax increases next year.

DuPont advanced 2.2 per cent as the chemical maker announced a share buyback and said 2012 earnings will be at the high end of forecasts.

Berkshire Hathaway rose 2.7 per cent after lifting the threshold it will pay for stock, signalling that chief executive Warren Buffett views the shares as undervalued. – (Additional reporting, Reuter, Bloomberg)