UK's top share index rises

Britain's top share index closed up but off session highs on Thursday as markets fretted over global growth prospects, despite moves by central banks to boost flagging economies. Miners closed slightly higher after China surprised the market by cutting interest rates for the second time in two months.
But in a sign of investor caution after a rally that had seen the FTSE 100 rise 3.5 percent in three days, pharmaceuticals, telecoms and other defensives were among the top gainers as attention turned back to weakening global growth. Major central banks across the world unveiled monetary easing measures on Thursday to bolster their economies, some of them within market expectations, further confirming the downward pressures on the world economy. As expected, the Bank of England launched a third round of monetary stimulus.
The European Central Bank cut its main interest rate to a record low of 0.75 percent and its deposit rate to zero, but the gloomy economic outlook presented by ECB President Mario Draghi did little to bolster investor confidence. "(Growth) is slowing all around the world now. In a broader sense, China's interest rate cut could provide worries and shows the country's central bank is fighting hard to combat it," Chris Beauchamp, market analyst at IG Index in London, said.
Focus now switches to the United States, whose services sector expanded at the slowest pace in June since January 2012, data showed on Thursday, and whether the Federal Reserve will take action to boost growth at its meeting later this month. Some economists had expected the Fed to launch a third round of outright bond-buying as soon as July to shore up the economy, but better-than-expected jobs data, ahead of non-farm payrolls on Friday, also fanned worries that the job market performance would not compel the Fed to provide more QE immediately.
"I think the central banks are really running out of options in the longer term and I think you are getting diminishing returns with these moves," Beauchamp said. London's blue-chip index ended up 8.16 points, or 0.1 percent, at 5,692.63 points, with volume remaining relatively thin, at 77.5 percent of 90-day average. Among the stand out performers on the FTSE 100 was British engineering group GKN, which closed up 13.1 percent.
GKN rose after it agreed to buy the aerospace division of the world's number two truck maker Volvo's aerospace division for 633 million pounds ($986 million), expanding its presence in the fast-growing civil aircraft sector. The deal will be funded by new debt and a placing of 140 million pounds, representing around 5 percent of GKN's current market capitalisation.