UPDATE 2-FTSE 100 ekes out gains on hopes of Fed rate cut, Provident surges

  • Reuters
  • Stock Market News
UPDATE 2-FTSE 100 ekes out gains on hopes of Fed rate cut, Provident surges
Credit: © Reuters.

* FTSE 100 up 0.1%, FTSE 250 up 0.3%

* Fed comments bolster sentiment

* Fallout of Woodford fund suspension hits Hargreaves

* Provident surges after NSF drops hostile bid (Adds news items, updates with closing prices)

By Shashwat Awasthi

June 5 (Reuters) - London's main index inched higher on Wednesday as comments from the U.S. central bank seen hinting at a rate cut soothed investor nerves, while mid-cap sub-prime lender Provident surged after rival NSF dropped its hostile bid.

The FTSE 100 .FTSE rose 0.1%, up for the third straight session, while the mid-cap FTSE 250 .FTMC rose 0.3%.

"Markets are in a state of flux right now, so we are seeing broader swings without a directional shift. I'd be cautious about any rally like this when it seems to be on nothing but fumes," Markets.com analyst Neil Wilson said.

Following comments by St Louis colleague James Bullard, U.S. Federal Reserve Chairman Jerome Powell said on Tuesday the bank would react "as appropriate" to the fallout from an intensifying Sino-U.S. trade dispute.

Global markets gained in response, interpreting the comments as an indication that the prospect of a rate cut was rising and a shift from the more patient stance the Fed has taken in recent months. an explicit reference to a cut but enough for this market to latch on to," Wilson said. "Those betting the farm on the Fed cutting rates this year may be left with a small harvest."

Housebuilders, seen as particularly vulnerable to any fallout from Brexit, gained after a business survey showed a modest expansion among services firms in May.

However, the bigger picture remained murky as the data also showed almost stagnent British economic growth on Brexit jitters and global growth worries. manager Hargreaves Lansdown HRGV.L fell another 6.8%, pushing this week's losses to over 11% after well-known money manager Neil Woodford suspended trading in one of his funds on Tuesday.

Following on from the suspension, Woodford said that orders to trade in his flagship fund placed after 1100 GMT last Friday had been rejected, leaving investors unsure of when they would get their money back. Woodford Patient Capital Trust WPCT.L also shed 6.9%.

Subprime lender Provident Financial PFG.L soared 16.1% on its best day in more than three months as it succeeded in fending off a hostile 1.3 billion pound bid from smaller rival Non-Standard Finance NSF.L . Provident lags FTSE midcap index since NSF's hostile bid



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