By Carla Mozee, MarketWatch
EasyJet downgraded
LONDON (MarketWatch) -- U.K. stocks finished Thursday's volatile
session lower after the Bank of England met expectations in keeping
monetary policy unchanged.
The FTSE 100 index logged brief periods of minor gains, but
ended down 0.6% at 6,597.37. The move was in line with other
European markets in part as a trade war between Russia and the West
escalated.
U.K. stocks had narrowed losses just after the central bank, led
by Gov. Mark Carney, left its key lending rate at 0.5% and held the
size of its bond-buying program at 375 billion pounds ($631
billion).
Next up for investors will be the Bank of England's quarterly
inflation report due Wednesday, as speculation ramps up that some
policy makers will begin pushing for a rate hike from its
record-low level.
Interest-rate futures currently indicate that the market is
looking at the possibility of a rate hike in December. But Richard
Perry, market analyst at Hantec Markets, said an increase may not
arrive until early 2015.
The bank will issue another quarterly inflation in February that
will include "new forecasts for inflation, for growth, for the
economy," he said. "At that stage, when they've got it set in
stone, I think that then you'll start to see a possibility of a
rate hike in March," when the first meeting after the February
inflation report will be held.
The pound (GBPUSD) fell to $1.6833 per dollar compared with
$1.6856 ahead of the bank's announcement Thursday. The pound bought
$1.6854 on Wednesday.
Movers
Coca-Cola HBC AG was the worst performer on the FTSE 100,
falling 5.3% as the bottler warned it expects volume to continue
declining for the rest of the year, citing difficult economic and
trading conditions and sudden deterioration in Russia as reasons
for the outlook.
EasyJet fell 3.4% after a ratings downgrade to equal weight from
overweight at Barclays. "Despite an attractive valuation given
recent underperformance, we now believe capacity concerns will
continue to weigh on easyJet's multiple as we approach the winter,
and we do not expect yield momentum to pick up until next summer,"
the analysts said.
Old Mutual PLC declined 1.7% following the investment and
insurance firm's report that first-half pretax profit fell to 564
million pounds ($949.9 million) from GBP805 million in the same
period a year ago.
Rio Tinto shares ended 0.5% lower. They had been up more than 2%
during in the day as the company said first-half profit more than
doubled on cost cuts and higher production of iron ore.
But shares of Carnival PLC enjoyed a gains of 2% each after the
cruise operator's rating at Bank of America-Merrill Lynch was
raised to buy from neutral.
Aviva PLC shares popped up 2.6% as the insurer's first-half
operating profit rose despite the impact of lower annuity sales and
other factors.
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