LONDON The FTSE top share index closed at a new nine month high on Wednesday, led by an energy sector buoyed by hopes that the U.S. Federal Reserve would continue to provide stimulus for the world's biggest economy.
Oil & Gas and basic materials, which rise and fall with optimism over the economic outlook, combined to added over 13 points to the FTSE, which rose on expectations the Fed will launch a fresh round of $45 billion (27 billion pounds) in bond buying a month, bringing the monthly pace of asset purchases to $85 billion (52 billion pounds).
"There's only one game in town today, and that's the Federal Reserve at 17:30 BST tonight. Frankly everything else pales into distant insignificance," Jeremy Batstone-Carr, research analyst at Charles Stanley, said.
"In the short-term, it's clear that central banks, through their actions, have cut the equity risk premium, and therefore encouraged the rerating that we've seen. But in the medium to longer term, it is growth that is the ultimate determinant of share price."
The FTSE 100 index closed up 20.88 points, or 0.4 percent at 5,945.85, its highest close since March.
The energy sector added 9 points to the index as oil rose to around $110 a barrel, with investor anticipation of renewed monetary stimulus outweighing plentiful supply.
The materials sector also prospered, with miner Anglo American among the FTSE 100 leaders, ahead by 2.7 percent as it was lifted by a Barclays upgrade to equal weight from underweight.
The rise took gains for December to 1.3 percent less than halfway through the month, despite recent downgrades to growth outlooks across the UK and the euro zone.
A rise in December would be the 10th straight year of gains in the last month of the year, and the index rose for the sixth straight day for the first time this year.
However, the recent gains have been made in thin volumes, and while the index closed above 5,932, the intraday high in September, other key levels need to be passed before it can hit 6,000.
"From a chartist point of view, it's very risky to buy into this rally," Nicolas Suiffet, technical analyst at Trading Central, said, adding there was resistance between 5,989 and 6,105, the upper end of its short term trading range around a 52-week high and the top hit in 2011 respectively.
"Short term oscillators lack momentum and failed to deliver any significant buy signal during the recovery. Furthermore, low trading volume could indicate the trend is not reversing up," he added. "Now may not be time to buy markets."
Capping the index were ex-dividend factors, which clipped 1.70 points off the FTSE 100 on Wednesday. Babcock International, Polymetal, and Wolseley all traded without entitlement to their latest dividend payout.
(Additional reporting by Jon Hopkins; editing by Ron Askew)