FTSE: 5,340.38 (+21.79) Mid-250: 10,365.05 (+43.72) Small Cap: 2,959.82 (+3.24):UK STOCKS climbed for a third day yesterday, after a rally in retailers helped offset the Bank of England's decision not to extend stimulus and concern by the European Central Bank that economic threats had intensified.

The FTSE 100 Index climbed 0.4 per cent in London after swinging between gains and losses more than five times yesterday.

“There was a glimmer of hope that the Bank of England might announce the commencement of a second round of quantitative easing,” said London-based Angus Campbell, head of sales at Capital Spreads.

“It wasn’t forthcoming but the market did hold up well. Despite the major risks faced by equity markets, the recent strength can be attributed to investors building up their expectations that further stimulus packages are imminent,” he said.

The Bank of England’s nine-member Monetary Policy Committee, led by Mervyn King, maintained the target of its bond program at £200 billion as forecast by all economists in a Bloomberg News survey. It also held the benchmark interest rate at a record-low 0.5 per cent.

Home Retail gained 2 per cent to 117.8p after sales declines eased at its Argos catalogue chain.

Morrison gained 4.2 per cent to 301.6p.

Marks and Spencer, Britain’s largest clothing retailer, climbed 2.6 per cent to 321.9p, extending Wednesday’s 4 per cent advance.

OFT Probe Admiral, a car insurer that owns the confused.com website, fell 2.4 per cent to 1,364p after the Office of Fair Trading said it will start a probe into rising UK private motor insurance premiums, ahead of possible action to improve the way the market works.

Schroders dropped 2.1 per cent to 1,446p after analysts at Deutsche Bank lowered their recommendation for the UK’s largest independent money manager to “sell” from “buy”.

The bank also downgraded shares of Ashmore to “hold” from “buy”. The stock gained 4.8 per cent to 420p after the FTSE yesterday announced the fund manager will be added to the FTSE 100 after trading ends on September 16th.

Tullow Oil gained 4.8 per cent to 1,227p after the Guardian reported renewed speculation that China’s Cnooc could make a bid for the oil producer.

Logica jumped 5.7 per cent to 87.1p. – (Bloomberg)