U.K. Stocks Advance as BOE Considers Interest-Rate Cut
Tullow Oil Plc gained 3.3 percent after saying it discovered oil offshore Ghana. Fresnillo Plc (FRES) added 1.6 percent after reporting a 15 percent increase in gold production. London Stock Exchange Group Plc fell 1.1 percent after saying “market conditions have remained weak.”
The FTSE 100 Index (UKX) rose 56.68, or 1 percent, to 5,685.77 at the close in London, the highest since July 5. The gauge has climbed 8.1 percent from its 2012 low on June 1 as central banks around the world announced measures to boost growth. The broader FTSE All-Share Index increased 0.9 percent today, while Ireland’s ISEQ Index was little changed.
“The minutes of the June meeting showed an overwhelming majority in favor of more quantitative easing,” said Chris Beauchamp, a market analyst at IG Index in London. “Although they held off from cutting the interest rate from its record low of 0.5 percent, the possibility was discussed, as were other measures to help stimulate the economy.”
The Bank of England’s Monetary Policy Committee was unanimous in a decision to leave its benchmark interest rate at 0.5 percent, according to minutes of their July 4-5 meeting released today.
The nine-member committee voted 7-2 to increase quantitative easing by 50 billion pounds ($78 billion) to 375 billion pounds, with Spencer Dale and Ben Broadbent dissenting in favor of no change, the minutes showed. While the MPC said cutting interest rates had “drawbacks” compared with more QE and the arguments for and against such a move were the same as in June, this assessment could change in light of the new credit measures.
Chancellor of the Exchequer George Osborne today outlined plans to encourage as much as 51 billion pounds of spending on U.K. infrastructure and exports to help pull the economy out of recession.
U.K. unemployment fell to a nine-month low in the quarter through May as the London Olympics helped to create jobs. The jobless rate based on International Labor Organization methods fell to 8.1 percent from 8.2 percent in the period through April, the Office for National Statistics said today.
In the U.S., housing starts rose 6.9 percent last month to a 760,000 annual pace after a revised 711,000 rate in May that was faster than initially estimated, Commerce Department data showed. The median forecast of 79 economists surveyed by Bloomberg News called for a 745,000 rate.
The volume of shares changing hands in FTSE 100 companies was 24 percent lower than its 30-day average today, according to data compiled by Bloomberg.
Tullow rallied 3.3 percent to 1,428 pence after saying its Wawa-1 well offshore Ghana encountered 20 meters of gas- condensate pay and 13 meters of oil pay.
Fresnillo climbed 1.6 percent to 1,430 pence after reporting a 15 percent increase in second-quarter gold production year-on-year to 127,003 ounces. The company said it’s on track to achieve its 2012 production targets.
Ashmore Plc (ASHM) increased 2.6 percent to 330.3 pence after Goldman Sachs Group Inc. raised its recommendation for the U.K. fund manager to buy from neutral.
Capital Shopping Centres Group Plc advanced 2.4 percent to 335.3 pence after Barclays Plc upgraded the company to overweight, the equivalent of a buy recommendation, from equal weight.
Homeserve Plc (HSV) jumped 12 percent to 187 pence after the Daily Telegraph reported that the emergency-repair provider has been approached by private-equity buyers. The company said in a statement that it isn’t in any discussions which could lead to a possible offer.
Aggreko Plc gained 3.5 percent to 1,995 pence after the world’s largest mobile-power supplier said it opened a gas-fired power plant in Mozambique along with South Africa’s Shanduka Group.
LSE (LSE) fell 1.1 percent to 1,002 pence even after Europe’s oldest independent bourse reported a 10 percent increase in fiscal first-quarter sales. Total income, which includes money earned from deposits at its central counterparty, gained 10 percent to 209.5 million pounds. That matched RBC Capital Markets’ estimate of 209.6 million pounds.
“Market conditions have remained weak and the summer period is expected to be quiet,” LSE said.
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