By Carla Mozee, MarketWatch Bank of England holds key rate at
0.5%
LONDON (MarketWatch) -- U.K. stocks fell Thursday, swept to
session lows as the European Central Bank decided to hold off on
expanding stimulus measures for the struggling eurozone, the U.K.'s
largest trading partner.
The FTSE 100 dropped 0.6% to 6,679.37, weighed down in part by
losses from resource-sector companies and financial shares. The
fall came alongside a 1.3% slide in the Stoxx Europe 600 , its
biggest percentage decline since mid-October.
ECB President Mario Draghi said at a press conference that the
bank's Governing Council is preparing for the possibility of easing
measures in early 2015, but said a rate hike at its January meeting
is not a foregone conclusion. Read live blog of Draghi's press
conference.
"The central bank ECB is very concerned with falling economic
growth and inflation expectations, but has not seen enough evidence
that the benefits of quantitative easing would outweigh the risks
at this point," said Matt Weller, senior technical analyst at
Forex.com, in a note.
Making much less, if any, noise in the market Thursday was the
Bank of England's decision to hold its key interest rate at 0.5%
and maintain the size of its asset-purchase plan at 375 billion
pounds ($588.65 billion). The pound (GBPUSD) fetched $1.5688,
compared with $1.5672 ahead of the Bank of England's statement.
Oil stocks finished in the red, resuming a recent run of
declines as the oil industry grapples with issues ranging from
oversupply, slowing demand and a steep fall in crude prices. Shares
of Tullow Oil PLC fell 2.9%, BP PLC moved 2.3% lower and Royal
Dutch Shell PLC gave up 1.3%.
Rio Tinto PLC shares fell 2.6%, with the mining heavyweight
saying at an investor seminar that "[w]hile the long-term horizon
remains robust, the near-term outlook is more challenging." Rio
Tinto also said that total capital expenditures are below the $8.5
billion forecast for 2014, and operating and exploration costs will
be reduced by $5.4 billion by the end of 2015.
Goldman Sachs said in a note dated Dec. 3 that it's retaining
its sell rating on the iron-ore miner. It added that Rio Tinto is
the most exposed in its iron-ore coverage to continued pressure
from additional supply and moderating demand growth in China. Rio
Tinto was removed from Goldman's pan-European conviction sell
list.
Shares of miners Anglo American PLC and BHP Billiton PLC also
fell, by 2.8% and 1.2%, respectively.
But shares of budget carrier easyJet PLC climbed 2.9% as the
company logged 3.1% growth in passengers in November. Load factor,
or the percentage of seats filled with passengers, rose to 89.5%
from 89%. EasyJet shares were among the winners in Wednesday's
session, as the U.K. government said it will exempt children from
taxes on economy-class flights.
Shares of TUI Travel picked up 3.6% on Thursday as the
vacation-package provider posted an 11% rise in fiscal 2014
underlying operating profit on a constant currency basis,
surpassing its recently raised forecast.
Unilever PLC shares pared gains to 0.2%. The consumer-products
maker has decided to turn its spreads division -- which includes
the Bertolli margarine brand -- into a stand-alone company, as the
unit weighs on the rest of business.
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