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.

More must-read stories from MarketWatch:

How IPOs could have sparked last week's selloff

The 5 most affordable U.S. cities for buying a home

Market expert sees stocks up another 70%

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Carnival (NYSE:CUK)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Carnival Charts.
Carnival (NYSE:CUK)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Carnival Charts.