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FTSE 100 closes up 47 points

Published: 13:22 03 Jul 2012 EDT

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The FTSE 100 continued Monday’s gains today as weak UK data fuelled speculation that the Bank of England will announce further stimulus after its policy meeting on Thursday. The UK’s blue chip index stopped trading at 5,687, up 47 points (0.83 percent) from Monday’s close.

Markit’s UK purchasing managers’ index (PMI) slipped to 48.2 in June from 54.4 in May, indicating that the sector contracted last month.

In addition, the Bank of England reported that the M4 money supply fell 0.1 percent in May against expectations of an increase of over one percent, while mortgage approvals fell to 51,098 and 51,627 in April.

The weak data put more pressure on the Bank of England to extend its £325 billion quantitative easing (QE) programme to support the UK economy.

“Today’s economic news was a real clincher in terms of ensuring that the MPC will increase its asset-purchase program by at least GBP 50bln when it meets on Thursday,” said chief strategist at FXPro Michael Derks.

The European Central Bank will also hold a policy meeting on the same day with traders expecting the bank to reduce its interest rate, which currently stands at one percent.

Mining stocks were in demand today following a surge in base metal prices.

Vedanta Resources (LON:VED, up 6.1pct at 961p) led the sector, followed by Antofagasta (LON:ANTO, up 3.8pct at 1,139 pence), Kazakhmys (LON:KAZ, up 3.7pct at 757p) and Rio Tinto (LON:RIO, up 3.2pct at 3,157p).

Investors also bought engineering company Weir (LON:WEIR, up 3.1pct at 1,612p) and Evraz (LON:EVR, up 3.6pct at 267.7p).

Aberdeen Asset Management (LON:ADN, down 3.7pct at 255p) was the heaviest faller in the top flight after Credit Suisse sold its seven percent stake in the company.

Other notable fallers included broadcaster ITV (LON:ITV, down 1.9pct at 76.35p) and home improvement retailer Kingfisher (LON:KGF, down 2.5pct at 281.8p).

Barclays (LON:BARC, down 0.8pct at 167.05p) fell after announcing the resignation of its chief executive Bob Diamond and chief operating officer in the same day in the wake of the Libor rate manipulation scandal.

While bank RBS (LON:RBS, down 1.1pct at 216.5p) and broker ICAP (LON:IAP down 1.5pct at 334.8p) also fell.

Water group United Utilities (LON:UU., down 0.9pct at 63.52p), which is seen as defensive stock, was also out of favour.

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