FTSE and global markets bounce as commodities rise

Rising commodity prices stoked a rally by the FTSE 100 and other global stock indices on Wednesday, as investors awaited the release of minutes from the Federal Reserve’s latest policymaking meeting.

The benchmark UK index of blue-chip shares took on 1.07%, or 63 points, to 5,924 and the Mid-250 index added 0.44%, or 52 points, to 11,888.

‘The strength in commodities has helped to lift the heavyweight stocks higher in European trade,’ said Giles Watts at City Index.

He added: ‘A near 3% gain in copper prices, which traded at a new two-week high, aligned with gains in the prices of crude oil and gold has helped to facilitate higher demand for resource equities.’

US stock markets also advanced, as better-than-expected earnings from technology giant Dell lifted sentiment, offsetting a downbeat outlook from retailer Staples.

The Dow Jones Industrial Average edged up 0.16% to 12,500; the Standard & Poor's 500 index was 0.42% higher at 1,335; and the Nasdaq Composite index climbed 0.51% to 2,797.

Later in the day, investors awaited minutes from the Federal Open Markets Committee’s meeting in April for clues to how the Fed will wind down the second phase of its quantitative easing programme, known as QE2, which has seen it buy heavily in the US government bond market.

Crude prices rose after official data showed that US oil inventories were unexpectedly flat last week, with Brent crude for delivery in June gaining 2.25% to $112.46 per barrel.

Gold hardened 0.9% to $1,498 an ounce, halting a recent decline, while silver rebounded 3.7% to $35.22 an ounce.

Suki Cooper, analyst at Barclays Capital, said gold prices had found support from ‘growing physical interest upon price dips.’ Writing in a research note, she added: ‘More importantly, longer-term investor appetite remains relatively robust against a backdrop of lingering macro uncertainties.’

Meanwhile, sterling dropped following mixed UK jobs data and after minutes from the Bank of England’s latest policymaking meeting showed that officials voted again six to three in favour of keeping rates at record lows. The pound weakened 0.52% versus the dollar to $1.616, and fell 0.75% against the euro to €1.133.

The falls also came ahead of key UK retail sales figures on Thursday, as well as US data on home sales and manufacturing activity.