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FTSE down 0.9%, commodities weigh; BoE on hold

FTSE down 0.9%, commodities weigh; BoE on hold
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First Published: Thu, Apr 08 2010. 04 48 PM IST
Updated: Thu, Apr 08 2010. 04 48 PM IST
London: Commodities pushed Britain’s top shares index down 0.9% by midday on Thursday, after the Bank of England left interest rates and its quantitative easing programme unchanged, as expected, and ahead of the eurozone rate decision.
By 1109 GMT the FTSE 100 was down 54.09 points at 5,707.97, slightly paring some earlier losses, after it fell 18.29 points on Wednesday. The blue chips are up 5.3% in 2010.
Miners were the biggest drag on the index, as commodity prices retreated across the board as the demand outlook clouded over.
Rio Tinto, Xstrata, Lonmin, Anglo American, Kazakhmys and BHP Billiton fell 1.2% to 3.2%.
The FTSE remained on the back foot after the Bank of England kept interest rates at a record low of 0.5% for the 13th month running and made no increase to its £200 billion asset-buying scheme to boost the economy.
“It is now imperative for the incoming government to clearly demonstrate (it will make) a real cut in the budget deficit and hence a reduction in the accumulation in the level of debt,” says chief economist of Charles Stanley, Edward Menashy.
The pace of future fiscal tightening is unclear, with the British election set for 6 May and no party clearly in the lead.
The European Central Bank, meanwhile is expected to keep euro zone interest rates at a record low of 1.0%, when it announces its decision at 1145 GMT.
Energy stocks were weighed by weaker crude which fell back for a second day after recent strong gains as the dollar rose and on higher stockpiles.
BG Group, BP, Royal Dutch Shell, Tullow Oil and Cairn Energy fell 0.1%-1.6%.
Risk-sensitive bank stocks also fell. Barclays, Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group fell 1.2%-1.9%.
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First Published: Thu, Apr 08 2010. 04 48 PM IST
More Topics: Markets | Britain | European stocks | FTSE 100 | Miners |