London pre-open: Strong start expected after dovish comments from Bernanke

11th Jul 2013 07:34

The UK benchmark index is expected to open with gains of over one per cent in early trading on Thursday as markets react to dovish comments from Federal Reserve Chairman Ben Bernanke.City sources predict the FTSE 100 will open up 89 points from yesterday's close of 6,505. Minutes of the June Federal Open Market Committee (FOMC) meeting released after the UK close last night didn't reveal much new, with comments from policymakers in line with previous remarks by Bernanke. The statement reiterated that downside risks to the economy had diminished and activity was picking up, but "many" members wanted to see further progress in the labour market before beginning to 'taper'.However, given that the meeting took place before the release of the release of last month's jobs stellar report, many analysts still expect a scaling back of quantitative easing (QE) by as early as September.A Q&A session with Bernanke after the markets closed saw Wall Street benchmarks gain in after-hours trading as he said that the Fed would not think about raising short-term interest rates even if the unemployment rate falls dramatically. "It may be well sometime after we hit 6.5% before rates reach any significant level," he said."The decision by Bernanke to focus more on interest rates last night sent a clear message that days of large scale asset purchases are numbered. The Fed appears more focused on damage limitation for the markets than trying to prolong the purchases for a few more months to avoid spooking investors," said Market Analyst Craig Erlam from Alpari.Stocks to watch Engineering company Babcock International Group has kicked off the 2013/14 financial year in line with its expectations, delivering strong trading results. Without providing any figures, the firm released a statement saying all its business units performed well in the first quarter with high activity levels.Lower sugar revenues at Associated British Foods have led to group turnover growth slowing in the third quarter with the group foreseeing softening of European sugar prices in the coming year.Recruitment firm Hays reported a modest increase in net fees for the quarter ended June 30th 2013 and said it expects fragile and mixed conditions to continue.BC