LONDON -- The big market driver today is the Bank of England's (B of E) new stimulus package, which gave a much-needed boost to the U.K.'s banking sector. Announced yesterday, the new measures will see billions in cheap credit provided to banks to lend on to business customers, in an effort to offset some of the contagion from the eurozone. It marks a change from the previous approach of quantitative easing, after banks were criticized for hanging on to too much of the cash and not passing on the liquidity as hoped.
The FTSE 100 (INDEX: ^FTSE) responded with an early 45-point rise to 5,510, though it's again of less than 1% and the index is still down on the week.
Other European indexes followed suit with similar percentage gains -- the German DAX rose 58 points to 6.197 (1%) and in France the CAC 40 put on 39 points to 3,073 (1.4%).
Good for banks
Bank shares responded appropriately, with Royal Bank of Scotland (NYSE: RBS) leading the way with a 6% rise to 244 pence, closely followed by Barclays, up 5% to 202 pence, and Lloyds Banking Group up 4% to 31 pence. HSBC Holdings trailed, rising less than 2% to 555 pence.
Some of the miners regained a little of yesterday's losses, led by Xstrata (LSE: XTA.L) up 18 pence to 918 pence, and Rio Tinto up 76 pence to 2,942 pence -- a little over 2% in each case.
At the red end of the table, BSkyB Group (LSE: BSY.L) shares fell a further 1.5%, losing 10 pence to 661 pence, though BT Group only dropped 1.3 pence to 200 pence, as the wisdom of paying such high prices for football rights continues to be questioned.
Mixed company news
Premier Foods (LSE: PFD.L) has had a bad time of late, with its shares losing more than 60% over the past 12 months. But things were sweetened a little this morning with the announcement that the firm has agreed to sell its vinegar and sour pickles business to Mizkan Group for 41 million pounds. The shares gained 11% on the news, up 9 pence to 89 pence.
Shares in Lamprell put on 10 pence for a gain of 13% to 89 pence on news that the company has successfully delivered an offshore drilling platform.
Meanwhile, a profit warning from Albermarle & Bond pushed the pawnbroker's shares down 6%, falling 17 pence to 259 pence. A pre-close update from Aggreko also disappointed the market, and its shares dropped 91 pence, for a 4% fall to 2,069 pence.
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