London insurers attract attention as FTSE rises Insurers were attracting attention in London on Wednesday, with bid speculation coinciding with the first warning on the costs of the UK's summer floods. Shares in RSA Insurance fell to the bottom of the FTSE 100 after the company warned claims relating to the wet weather in the UK would lead to losses of £40m for June and £10m for July. It also said losses relating to May's earthquakes in Italy were estimated to be about £35m. The stock lost 3.3 per cent to 104.8p. Homeserve rose to the top of the FTSE 250 even after it denied newspaper reports of bid interest in the company from private equity. The company was fined for making silent cold calls to customers in April, which came after it suspended outbound sales activities last year having discovered the potential mis-selling of some products. It remains the subject of an investigation by regulators. "We continue to view Homeserve's international growth opportunity, supported by its low capital intensive model with a high recurring income base to present an attractive business model," said David Brockton, analyst at Espírito Santo Investment Bank, However, the FSA investigation brings Homeserve further material risk of reputational damage and a lengthier than expected review process. The shares rose 4.2 per cent to 174p. Overall, improved sentiment aided hopes that the economic slowdown in China was moderating following news that its property market rebounded in June. Bu worries about the extent of the dependence of markets around the globe on economic stimulus measures kept gains on the FTSE 100 modest after testimony in the US from the chairman of the Federal Reserve and ahead of minutes from the Bank of England's latest Monetary Policy Committee meeting. It voted 7 to 2 in favour of a £50bn extension to its quantitative easing programme taking it to £375m, with the dissenters, Spencer Dale and Ben Broadbent voting for no increase. The minutes also revealed that there was a discussion about reducing interest rates from their historic low of 0.5 per cent. Divyang Shah, global strategist at IFR Markets, said: "We are moving ever closer to a lower bound on rates that is closer to zero and the important aspect to warning banks that the base rate could be cut is that it also helps to make current credit measures more effective." Banks have been earning 0.50 per cent by parking funds at the Bank of England and if credit growth continues to disappoint then the warning is that banks will not gain a benefit by continuing to hoard funds at the BoE. The FTSE 100 was 0.2 per cent higher at 5,641.95, a rise of 13 points. The mid-cap FTSE 250 was also 0.2 per cent higher at 11,036.59, a rise of 23 points.