UPDATE 1-Stimulus bets lift FTSE 100 after record collapse in economic output

12 Aug 2020 / 16:25 H.

    (For a live blog on European stocks, type LIVE/ in an Eikon news window)

    * Financials, energy, consumer staples drive gains

    * Balfour Beatty's pre-tax loss drags on mid-cap index

    * Insurer Admiral, fashion retailer ASOS jump on results

    * FTSE 100 up 0.7%, FTSE 250 off 0.3% (Adds comments; updates prices)

    By Sagarika Jaisinghani

    Aug 12 (Reuters) - London's FTSE 100 rose on Wednesday as investors counted on the central bank to further loosen monetary policy after data showed the economy entered a recession in the second quarter with a record 20% plunge in output.

    The export-laden FTSE 100 was up 0.7%, gaining for a fourth straight session with financial, energy and consumer staples stocks leading the way.

    The mid-cap FTSE 250, however, retreated slightly from two-month highs, driven by a 4.7% drop for infrastructure firm Balfour Beatty as it reported a pre-tax loss for the first half due to the COVID-19 pandemic..

    The UK suffered the sharpest contraction in April-June among the world's biggest economies, but there were signs of a recovery in June following the easing of coronavirus-driven lockdowns.

    "Everyone's priced in the second-quarter GDP as a bit of a disaster and the feeling that we might still be in for a 'V'-shaped recovery is still mildly out there," said Keith Temperton, a sales trader at Lombard Forte Securities.

    A day before the gross domestic product data was released, Bank of England Deputy Governor Dave Ramsden said the central bank would step up quantitative easing if the economy slowed again.

    "Most central banks have fired a lot of bullets lately and you're going to be hearing more comment rather than action," Temperton said. "The guns will be loaded but I don't think they'll be firing the bazooka (yet)."

    A raft of stimulus has helped the benchmark UK stock indexes bounce from their March lows, but they are still well off their pre-pandemic highs amid surging unemployment and forecasts of a slower-than-expected economic rebound.

    In earnings-driven moves, cybersecurity firm Avast slumped 4.3% despite raising its full-year revenue forecast, while insurer Admiral jumped 4.5% after reinstating its special dividend and posting higher first-half profit.

    Online fashion retailer ASOS surged 8.7% on higher-than-expected full-year sales and profit forecasts. (Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Subhranshu Sahu)

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