June 16, 2020 / 7:24 AM / a month ago

London stocks jump on global stimulus hopes

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo

(Reuters) - UK shares posted their best session in a month on Tuesday as hopes of more global stimulus and a record rise in U.S. retail sales eased worries that recovery from a pandemic-induced slump would take a long time.

British blue-chips .FTSE rose 2.9% as expectations of further stimulus from the Bank of England and a report that Washington was preparing a nearly $1 trillion infrastructure proposal helped build on gains made after the U.S. Federal Reserve's move to expand its corporate bonds purchases.

“Central banks everywhere are doing what they can to manage economic catastrophe through liquidity infusion,” said Keith Temperton, a trader at Tavira Securities. “Whenever this happens it gives confidence to the markets that everything will be okay, leading to an immediate boost.”

Consumer staples led gains .FTNMX2350 .FTNMX3530 .FTNMX3780. Banks .FTNMX8350 followed, even though Britain’s financial sector regulator told lenders to brace for a pile-up of debt as businesses are likely to default on repayments.

AstraZeneca Plc (AZN.L) rose 2.8% after its chief executive said the drugmaker’s potential coronavirus vaccine was likely to protect against COVID-19 for about a year.

The mid-cap FTSE 250 index .FTMC rose 2.2%. Cinema operator Cineworld Group Plc (CINE.L) climbed 1% after saying it plans to reopen all its theatres by July, while baker Greggs (GRG.L) jumped 5.2% after confirming plans to reopen 800 shops on June 18.

Data showing U.S. retail in May rose dramatically chimed in with UK data showing that the jobless rate had unexpectedly held at 3.9% over the three months to April, albeit largely due to the government’s huge job retention scheme. Payrolls shrank by more than 600,000.

“We shouldn’t extrapolate from today’s report that we are imminently heading back to ‘normality’,” said ING chief international economist James Knightley, pointing to jumps in the number of COVID-19 cases in Beijing and the United States.

Reporting by Susan Mathew, Shreyashi Sanyal and Shashank Nayar in Bengaluru; Editing by Kevin Liffey

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