* FTSE 100 closes 0.8 percent higher
* Sainsburys volatile after trading update
* Boohoo.com plunges following profit warning
By Atul Prakash
LONDON, Jan 7 (Reuters) – Britains top equity index gained
nearly 1 percent on Wednesday, rebounding from a three-week low
as euro zone consumer price data raised expectations of new
stimulus from the European Central Bank.
The blue-chip FTSE 100 index, which had fallen in
the last three sessions and hit its lowest since mid-December on
Tuesday, finished 53.32 points, or 0.8 percent, higher at
Data showing euro zone consumer prices fell more than
predicted in December heightened expectations the ECB will
announce a government bond-buying programme, or quantitative
easing (QE), at its policy meeting later this month to try and
revive prices and the euro zone economy, analysts said.
(ECB President) Mario Draghi will find it very difficult to
deny the euro zone is suffering from a fall in the cost of
living at the ECB meeting later this month, and this could force
him to fire up the printing press, IG analyst David Madden
Traders still cant shake the looming political uncertainty
in Greece but, for now, they are content to ride the QE gravy
European stock markets have been choppy in the past days
ahead of a Jan. 25 election in Greece. Investors are concerned
that if the Syriza party leads the next government, then the
risk of a sovereign default for Greece will increase and the
country could leave the euro zone. Syriza has promised to end
austerity and renegotiate the countrys debt.
Retail stocks remained volatile. Sainsburys rose
more than 4 percent in early trading after reporting
better-than-expected results in the Christmas quarter. But its
shares closed down 2.1 percent on concern it might lose more
market share to discounters and could suffer in an intensifying
Sainsburys numbers were better than expected, but I am not
a buyer of the stock for now, as top line guidance remains
unchanged, said Securequity sales trader Jawaid Afsar.
Grocer Tesco, which posts an update on Thursday,
gained 1.8 percent and Marks Spencer rose 1.9 percent.
WM Morrison shares, however, fell 1.3 percent.
Among other retailers, shares in the online fashion company
Boohoo.com, which is not in the FTSE 100 index, slumped
42 percent after cutting its profit outlook.
Aggreko, which fell 12 percent in 2014, rose 3
percent. The worlds biggest temporary power provider raised its
2014 trading profit expectations following a debt settlement.
(Additional reporting by Sudip Kar-Gupta; Editing by Larry King
and Susan Fenton)