Another choppy session sees FTSE move higher on RBS stake sale talks

European markets showed early signs of positivity this morning following strong sessions both in US yesterday and in the Asian markets over night. European markets have continued to rally after a speech from Chairman of the Federal Reserve Ben Bernanke yesterday afternoon.

In his speech Mr Bernanke suggested that the US Fed may need to consider taking further action to stimulate growth in the economy and help underpin the labour market. Although he acknowledged recent gains his comments that “improvements in the labour market might not be able to be sustained” have lead traders to question the probability of a further round quantitative easing. Or perhaps more importantly investors have seen that QE3 has not been removed from the picture and that if deemed necessary the central bank will engage in the strategy of buying up bonds to stimulate the economy. The US S&P500 finished up 1.4% wiping out last week’s losses and the FTSE100 had its largest daily gain in 2 weeks closing up 0.8% at 5902.

The FTSE 100 has added to yesterday’s gains rising a steady 0.3% this morning before pulling back somewhat in late morning trade. The banking sector is leading the way for the blue chip index with RBS up over 6% within the first hour of trading following news that the UK Government is looking to sell some of it’s stake in the bank to Abu- Dhabi’s sovereign wealth fund. Suggestions have been made that up to one third of the British Government’s 82% stake could be on the table for the Abu-Dhabi investors. Barclays and Lloyds were also showing strength gaining 2.8% and 2.5% respectively.

Also showing signs of upward momentum this morning is Copper miner Kazakhmys after they published their full year results. Despite the fact that they had released a detailed trading update earlier this month their share price still jumped over 3% on the news that revenue had risen to $3563m from $3237m in 2010. Other shares in the sector benefited from the news with Vedanta, Fresnillo and ENRC all showing signs of strength.

Due to a lack of domestic economic data this afternoon investors will be keeping their eyes firmly fixed on US Consumer Confidence data out from the US taking centre stage at 3pm. This assessment of consumer sentiment regarding business conditions, employment and personal income is expected to be at the same level as last month, demonstrating that despite the recent decline in unemployment in America consumers are still remaining that little bit cautious. We could however see a somewhat mixed market reaction as a weaker than expected reading could help to inspire investors that QE3 remains around the corner, whilst a stronger reading may boost growth expectations but at the same time weaken QE3 expectations.