Top shares pushed higher in early trade on Wednesday, extending Tuesday's rally in tandem with gains on Wall Steet and in Asia, led by strength in banks and miners as investors await the outcome of the U.S. Federal Reserve meeting.
No changes are expected in U.S. monetary policy at the Fed meeting, with an announcement due after the London markets' close at 05:30 p.m.. But some investors are hoping the U.S. central bank could hint at a third boost to liquidity in the future.
At 08:03 a.m., the FTSE 100 <.FTSE> index was up 12.52 points, or 0.2 percent at 5,722.01, having gained 0.8 percent on Tuesday to recover around half of Monday's 1.8 percent drop.
Volume was fairly low at around 10 percent of the 90-day daily average as investors awaited the Federal Reserve decision as well as British first-quarter gross domestic product data, due at 08:30 a.m.
Most economists polled by Reuters think Britain will scrape through with GDP growth of 0.1 percent or slightly more in the first three months of this year, but a significant minority expect a contraction.
If the economy has contracted we will find we are in a recession, which may add to the growth fears pervading across Europe. However, a small contraction is likely to have already been priced in, said Matthew Nelson, Financial Sales Trader at Spreadex.
Whatever the figure is, we are likely to see a reactionary movement in other headline figures such as consumer confidence due to the psychological impact the GDP figure can have.
Firmer miners <.FTNMX1770> provided the biggest support for the blue chips early on as investor appetite for risk-sensitive stocks returned, and with copper prices holding steady.
Integrated oils <.FTNMX0530> were also in demand as Brent crude ticked higher, holding above $118 a barrel, with a bullish note from Barclays Capital previewing the sector's first-quarter earnings season also helping.
Barcap raised its Brent crude price assumptions for 2012-2016 and upped its earnings estimates for the sector, leading it to hike its price targets modestly for Royal Dutch
Banks <.FTNMX1770> also provided a big boost for the blue chips, with Barclays
Among other financials, life insurer Standard Life
We continue to see the stock as cheap trading at 0.9 times our forecast embedded value compared to our universe average of 1.3 times; it also has good yield support, Investec Securities said in a note repeating its buy rating on Standard Life.
Jefferies also upgraded its rating for ARM to hold from underperform.
Ex-dividend factors accounted for most of the top blue chip fallers, knocking 6.83 points overall off the FTSE 100 index on Wednesday, with Centrica