By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- U.K. stocks closed higher for the first
time in three days on Thursday, with Barclays leading advancers
after a strategy update. The benchmark index also stayed higher
after the Bank of England left policy on hold as expected.
The FTSE 100 index picked up 0.6% to end at 6,839.25, its
highest close since late February.
Shares of Barclays (BCS) topped the list of gainers, rising 7.9%
after the U.K. bank presented its strategy update. Barclays plans
to ax 7,000 jobs at its investment bank by 2016 and to create a
"bad bank" division consisting of 115 billion pounds ($195 billion)
of risk-weighted assets.
Other banks were also higher, with shares of Royal Bank of
Scotland Group PLC (RBS) up 1.7% and Standard Chartered PLC rising
2%. Sector heavyweight HSBC Holdings PLC (HSBC) slipped 0.5%,
adding to a 1.3% loss from Wednesday when the bank reported a fall
in profit and revenue for the first quarter.
Also in focus in London, the Bank of England left its key
lending rate at a record low of 0.5% and made no changes to its 375
billion pound ($635.8 billion) asset-purchase program. The decision
was widely expected as policy makers have signaled they won't raise
rates until the remaining slack in the economy has been
absorbed.
Since the last BOE meeting, the U.K. unemployment rate has
dropped below 7%, which -- according to the bank's initial
forward-guidance framework from August -- was the threshold for
policy makers to consider raising interest rates. However, in
February the BOE introduced an updated interest-rate framework and
said it would focus on a wider range of economic indicators rather
than just the joblessness rate.
"The inflation report next week will be much more interesting,
as it could signal a shift towards an earlier rate hike, in light
of the recent strong data," analysts at Danske Bank said in a note.
The U.K. inflation report is scheduled for publication on
Wednesday.
The European Central Bank was also in the spotlight on Thursday
after President Mario Draghi said the central bank is "comfortable
with acting" at the June meeting albeit with the caveat that policy
makers want to see the June update to staff economic forecasts. The
ECB kept policy steady at the meeting on Thursday, defying pressure
to loosen policy to fight low inflation and a strong euro.
Among other movers in London, shares of BT Group PLC (BT) picked
up 2.9% after the telecom company posted a rise in fourth-quarter
profit despite lower revenue, as its sports TV channels boosted
business.
On a more downbeat note, shares of Sage Group PLC slid 5.3%
after the software firm said Chief Executive Guy Berruyer will
retire, leaving no later than March 31, 2015. The company said it
swung to a pretax profit in the half year ended March 31.
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