U.K. Stocks Little Changed as Investors Watch Rate PolicyJonathan Morgan
Concern that the Bank of England is getting closer to raising interest rates overshadowed optimism its euro-area counterpart will do more to support the economic recovery, pushing U.K. stocks to close little changed.
The FTSE 100 Index rose 3.86 points, less than 0.1 percent, to 6,829.17 at the close, after rallying to an eight-week high in the morning. The benchmark gauge climbed 1.3 percent in August amid optimism that the European Central Bank is ready to start buying bonds. The broader FTSE All-Share Index and Ireland’s ISEQ Index gained less than 0.1 percent today.
“The main focus of attention for investors at the moment is interest rates,” Oliver Wallin, the investment director at Octopus Investments Ltd. in London, said in a phone interview. “We are back to this dynamic of good news being reacted to badly by markets. It brings forward interest-rate rises sooner rather than later.”
Last month, BOE Governor Mark Carney lost the consensus among his policy makers on interest rates, as two officials called for an increase from a record-low 0.5 percent, according to the minutes of the Monetary Policy Committee’s Aug. 6-7 meeting. The remaining seven members, including Carney, opted for no change, saying early tightening could leave the economy vulnerable to shocks and jeopardize indebted households.
In the U.S., the Institute for Supply Management’s manufacturing index unexpectedly climbed to 59 in August, the highest level since March 2011, from July’s 57.1, the Tempe, Arizona-based group reported today. Readings greater than 50 indicate growth. The median forecast in a Bloomberg survey of economists was 57.
Weir Group Plc climbed 2.5 percent to 2,706 pence. Credit Suisse Group AG upgraded the shares to outperform, the equivalent of a buy recommendation, from neutral. Improving oil-and-gas and mining markets will boost profits, the brokerage said.
BHP Billiton Plc added 0.8 percent to 1,920 pence. Macquarie Group Ltd. said the businesses that the mining company plans to spin off as the NewCo unit will see strong earnings and cash-flow growth if the commodity market recovers.
Anglo American Plc, which owns the world’s biggest platinum producer, added 2.5 percent to 1,562 pence.