McCafferty urges interest rate rise; banks higher
Fri: Bank of England rate-setter Ian McCafferty said he believed the best course of action to safeguard the economic recovery would be to raise interest rates.
Mr McCafferty, who was the only member of the Monetary Policy Committee to vote in favour of a rate hike this month, said concerns on China “should not be overstated”.
London stocks finished strongly with the FTSE 100 climbing 147.52 points to 6109.01 after US gross domestic product for the second quarter was unexpectedly revised higher, adding to the case for an interest rate hike later this year.
The third and final estimate of second quarter US GDP was revised to show an annualised 3.9% increase, up from a previous estimate of 3.7%. Analysts had been expecting no change.
A separate report showed US consumer confidence in September was higher than originally estimated but remained markedly below last month’s level.
The data comes after Federal Reserve chair Janet Yellen said most Federal Open Market Committee members, herself included, anticipate an initial rate increase last this year followed by a gradual tightening thereafter.
Lloyds Banking Group advanced on news that the UK government cut its stake to 11.98% from 12.97% in August. Shares closed up 1.67p at 75.5, ahead of he 73.6p break even price.
Just Retirement rose as the company and fellow pension provide Partnership Assurance are to raise £150m in a share placing to help pay for their planned merger. The share were up 4.1p at 175.9p.
Royal Bank of Scotland climbed 8.3p to 319p after RBC Capital Markets upgraded the bank to ‘sector perform’ from ‘underperform’. The stock also benefited from positive comments from Morgan Stanley, which replaced Barclays with RBS in its preferred names in the sector.