Fed's stimulus pledge boosts stocks

THE US Federal Reserve’s commitment to additional stimulus to help the US economic recovery lifted US and European stocks yesterday.

Oil and gold also rose, but the dollar fell, after the Fed signalled it may keep interest rates low through 2014. The euro notched a five-week high against the dollar.

DUBLIN

HAVING DOMINATED activity on Wednesday following One 51’s sale of its 4.4 per cent stake in IFG, IFG lost some of the ground it had gained, slipping by 1.7 per cent to €1.10.

The financial services company also confirmed that its largest investor Fiordland Investment and non-executive director Peter Priestley now own a combined 22.8 per cent stake in the company. Fiordland, which made a failed approach to take over IFG last year, is believed to have held a 19 per cent stake previously.

Most of the stocks on the Irish stock exchange finished the session higher in line with the bullish market.

Smurfit Kappa continued its strong run of late, and was one of the best performers in Dublin yesterday, advancing 6 per cent on the day to finish at €6.27.

Food companies Glanbia and Arytza rebounded from falls on Wednesday. They added 2 per cent and 4.5 per cent respectively, with investors taking note of Glanbia’s recent indications that it is making plans to increase its milk processing capacity ahead of the abolition of milk quotas in 2015.

LONDON

UK STOCKS rebounded from two days of losses following the Fed announcements.

The benchmark FTSE 100 Index gained 1.22 per cent. The FTSE-All Share Index increased 1.3 per cent. Rio Tinto Group and Randgold Resources led commodity producers higher as metals prices advanced and Petropavlovsk increased its gold production forecast.

EasyJet rallied 10 per cent after reporting that revenue had increased. Revenue rose 17 per cent to £763 million in the quarter ended December 31st, offsetting fuel-bill increases and curbing a predicted first-half loss.

EUROPE

THE STOXX Europe 600 Index added 1.1 per cent to 257.81 at the close in London. The benchmark gauge has rallied 19.97 per cent from its low on September 22nd amid signs that the US economy is recovering and speculation that the euro area will contain its debt crisis.

National benchmark indexes advanced in all 18 western European markets.

Commodity shares led gains, with BHP Billiton and Rio Tinto Group adding at least 3 per cent. Nokia, the worlds biggest maker of mobile phones, rallied after smartphone shipments beat estimates in the fourth quarter. Petropavlovsk jumped 11 per cent after reporting a 24 per cent increase in 2011 gold production.

Shares of mining companies rallied the most of any industry group in the Stoxx Europe 600 as copper climbed to the highest level since September.

BHP Billiton, the world’s largest mining company, advanced 3.3 per cent to 2,199.5 pence. Anglo American, the third-largest copper producer, climbed 3.1 per cent to 2,737 pence after saying iron ore output increased 5 per cent in the fourth quarter, while copper volumes jumped 10 per cent.

US

HAVING RALLIED in early trade on the back of the announcements by the Federal Reserve, Wall Street edged lower by afternoon as housing and financial stocks lost ground after weaker-than-expected housing data gave investors reason to pause.

Housing-related stocks declined after data showed sales of new single-family homes fell for the first time in four months in December and were below Wall Street expectations.

In one of the busiest weeks in terms of corporate earnings, Caterpillar kept the Dow in positive territory as its shares gained 3.5 per cent to $112.89.

The manufacturer posted a jump in quarterly earnings that far exceeded Wall Street expectations on increased global demand for construction machinery and mining equipment.

3M, a conglomerate with operations throughout the economy, reported higher-than-expected quarterly earnings as demand from industrial and transport markets offset weak sales to makers of consumer electronics. The shares rose 1.6 per cent to $87.90

AT&T posted a $6.7 billion quarterly loss on a break-up fee for its failed T-Mobile USA merger and a pension-related charge on top of costly subsidies for smartphones, sending shares lower.

Amgen’s shares fell and weighed on the Nasdaq after the world’s largest biotechnology company said it would pay more than $1 billion to buy Micromet, a deal that would give it access to the companys novel cancer treatment technology.

Micromet’s shares jumped 31.9 per cent to $10.92 and were the most heavily traded on Nasdaq. – (Additional Reporting: Bloomberg)