A two-day meeting kicks off today at the US Federal Reserve to decide whether to bring to an end to the quantitative easing sooner rather than later.
But after weeks of doom-laden predictions and falls, the FTSE 100 closed up 82.24 to 6522.20 as traders started coming round to the idea that officials could wait until the new year to turn off the money taps.
Mike van Dulken at Accendo Markets said: “Consensus may have shifted back to favouring a delay until January, with potential for political hurdles returning should the Republicans start asking for too much following the budget deal, leading to another debt-ceiling stand-off early next year which may see the Fed hold off from any big decision.”
Aggreko led the biggest risers, up 129p to 1649p, on news it won the World Cup power generator contract.
Meanwhile, the biggest faller was RSA, down 2.4p at 94.1p, as shareholders reacted to the third profit warning in as many weeks after the problems at its Irish division, which cost chief executive Simon Lee his job. A downgrade by Deutsche Bank and negative outlook by ratings agency Fitch did not help, but UBS upgraded it from neutral to buy.
Elsewhere, persistent rumours that vultures were circling Cable & Wireless Communications for a possible takeover, sent shares up 1.8p to 49p. The company has been selling off non-core assets to focus on the Caribbean and Central American region, raising $1.4bn from disposals.
Other notable risers included Synergy Health up 77p to 1110p, as the medical services business said its order book had topped £1bn after deals in the US. The new contracts add £230m to the order book, which stands at £1.1bn.
Paper and packaging businesses also had a good day, with Mondi closing up 37.5p to 945.5p and rival RPC Group jumped 19p to 549p after announcing it has bought competitor Maynard & Harris Group for £103.5m.
Energy businesses also saw brisk trading yesterday, including Greka Drilling, up 0.5p to 14p, after signing a $65m contract with Essar Oil to drill 100 wells. And Northcote Energy managed a 0.05p rise to 0.9p as it started its fourth fracking operation in the US.