Most U.K. stocks advanced after the Bank of England said Britain is not ready for an increase in interest rates because of continued slack in employment.
Babcock International Group Plc advanced 1.1 percent after its joint venture was named a supplier for a 2 billion-pound ($3.3 billion) rail electrification project. Smurfit Kappa Group Plc jumped 4.8 percent in Dublin after raising its final dividend by 50 percent. Rio Tinto Group and Glencore Xstrata Plc led mining companies higher after China’s trade figures beat estimates. Tullow Oil Plc lost 6.3 percent after saying 2013 earnings fell.
The FTSE 100 Index added 2.37 points, less than 0.1 percent, to 6,675.03 at the close in London, as two shares in the gauge climbed for every one that slid. The benchmark has rallied 3.5 percent since Feb. 4 as investors speculated the Federal Reserve may delay a third cut to its bond purchases. The broader FTSE All-Share Index was little changed today, while Ireland’s ISEQ Index climbed 1.2 percent.
“The BOE’s inflation report signaled lower U.K. rates for longer,” Lena Komileva, the London-based chief economist at G+ Economics Ltd., said in an interview. “It will take investors, businesses and consumers some time to go through the bank’s new manual for monetary policy guidance. Expect increased U.K. market turbulence ahead as investors rush to catch up.”
BOE Governor Mark Carney said today the central bank won’t raise its key interest rate until the economy absorbs all the spare labor capacity in the next two to three years. The Monetary Policy Committee estimates that the gap, which resulted from higher-than-normal unemployment rate and a lack of opportunity for employees to work more hours, accounts for 1 percent to 1.5 percent of the economy.
The U.K.’s jobless rate slid to 7.1 percent in the three months through November, nearing the 7 percent threshold at which Governor Mark Carney has said policy makers will begin to consider higher rates. MPC members said last month they saw no immediate need to do that even if the level were reached in the near future. Carney today said policy makers estimate the medium-term equilibrium rate for unemployment is between 6 percent and 6.5 percent.
In China, the General Administration of Customs said exports jumped 10.6 percent in January from a year earlier. That exceeded the median projection of economists in a Bloomberg survey for a gain of 0.1 percent. Imports rose 10 percent, topping the projected advance of 4 percent.
Babcock climbed 1.1 percent to 1,410 pence. Network Rail named the company’s joint venture ABC Electrification Ltd. as one of four suppliers to electrify more than 2,000 miles of U.K. railway over the next seven years.
Smurfit Kappa jumped 4.8 percent to 18.98 euros after the maker of cardboard boxes raised its final dividend to 30.75 euro cents. Chief Executive Officer Gary McGann said better prices for packaging products will drive earnings growth in 2014. Smurfit will look for acquisitions in the Americas and Eastern Europe and will return capital to shareholders in the absence of suitable buyout opportunities, he said.
A gauge of London-listed mining companies rose for a seventh day, its longest winning streak since July 2011. Rio Tinto gained 1.5 percent to 3,510 pence. BHP Billiton Ltd. increased 0.7 percent to 1,862.5 pence. Anglo American Plc added 1 percent to 1,541 pence. Glencore Xstrata Plc climbed 1.3 percent to 337.15 pence.
Bunzl Plc advanced 1.9 percent to 1,418 pence. Bank of America Corp. upgraded the world’s largest distributor of disposable tableware and food packaging to buy from underperform, a rating equivalent to sell.
Tullow Oil lost 6.3 percent to 792.5 pence, its biggest drop since July. The explorer said 2013 earnings fell 73 percent. Tullow plans to invest about $1 billion this year to explore for oil in Mauritania, Kenya, Ethiopia, Norway and drill its first well off Guinea.
Telecity Group Plc slumped 9.6 percent to 660 pence, for the largest decline since December 2008. The data-center operator reported 2013 revenue of 325.6 million pounds, missing analysts’ projections for 328.9 million pounds.