FTSE 100 Jumps to 14 Year High on Ukraine Ceasefire Hopes and Services PMI
The FTSE 100 has advanced to its highest level in 14-and-a-half years today, boosted by hopes of an end to the conflict in eastern Ukraine.
President Petro Poroshenko released a brief statement claiming he has reached an agreement with Russian counterpart Vladimir Putin regarding a 'permanent ceasefire' in the Donbass region.
However, this optimism was later tempered somewhat after Moscow claimed the two leaders had agreed some steps to be taken towards peace, but that a ceasefire could not be confirmed because Russia is not a party in the conflict.
This is despite the fact NATO and Western nations have formally accused the Putin regime of arming and supporting pro-Russian separatists throughout the conflict in the region.
Speaking to Reuters, James Butterfill, global equity strategist at Coutts, said: 'It's favourable for the market. It reduces some uncertainty and suggests that investors will have one less tail risk to deal with.
'It doesn't mean that the Ukraine crisis is over, but it is a step in the right direction.
'It comes at a time when European economies are showing signs of a decline. The ceasefire news could help boost business confidence.'
Trading sentiment was much improved following the announcement, helping the FTSE 100 to advance by 0.8% to 6,883.42 points as of 10:15am.
This gain was also supported by the publication of the latest UK services purchasing managers' index, which showed the industry expanded at its fastest pace in close to a year.
Investors are now beginning to turn their attentions to the key central bank decisions due tomorrow, when policy meetings at the Bank of England and the European Central Bank (ECB) will both conclude.
While stock markets
do not seem to expect major shifts in tact from either bank, there have been some suggestions the ECB will be required to take further stimulus action sooner rather than later, with inflation running at historically-low levels and the Ukraine conflict threatening to impact economically.
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By Jonathan Sudaria, 3 September 2014