By Atul Prakash and Sudip Kar-Gupta
LONDON (Reuters) - Britain's top equity index rebounded from a three-week low on Wednesday as euro zone consumer-price data raised expectations of new stimulus from the European Central Bank. Aggreko (LONDON:AGGK) gained after raising its 2014 profit estimates.
The FTSE 100 index, which had fallen for the last three sessions and reached a three-week low in the previous session, was up 0.8 percent at 6,418.28 points by 1145 GMT.
Aggreko, which fell 12 percent in 2014, led the market higher, gaining 2.8 percent. The world's biggest temporary power provider raised its 2014 trading profit expectations following a debt settlement.
"It's a piece of good news for Aggreko after a disappointing year. It's a decent company but unfortunately it has got some headwinds due to a global slowdown," said John Smith, senior fund manager at Brown Shipley. Hopes of stimulus from the ECB also supported the market, he said.
"The ECB is definitely planning to go for a much wider quantitative easing programme, although the political uncertainty in Greece is going to make things a little difficult for (ECB President) Mario Draghi," he said. A Jan. 25 election in Greece could put the Syriza party into power, increasing the risk of a sovereign default.
Data showing euro zone consumer prices fell more than predicted in December heightened expectations the ECB will announce a government bond-buying programme at its policy meeting later this month, analysts said.
Sainsbury's rose more than 4 percent in early trading after reporting better-than-expected results in the Christmas quarter. But its shares were last down 1.4 percent on concern it might lose more market share to discounters and could suffer in an intensifying price war.
"Sainsbury's numbers were better than expected, but I am not a buyer of the stock for now, as top line guidance remains unchanged," said Securequity sales trader Jawaid Afsar.
Among other retailers, shares in the online fashion company Boohoo.com, which is not in the FTSE 100 index, slumped by around 40 percent after cutting its profit outlook.
Grocer Tesco, which posts an update on Thursday, was up 1.8 percent, Marks & Spencer rose 1.7 percent and WM Morrison was up 0.2 percent.
Traders said an accelerating decline in oil prices, with Brent crude prices falling below $50 a barrel for the first time since May 2009, would also keep pressure on the FTSE.
(Reporting by Atul Prakash; Editing by Larry King)