London shares closed in the black on Thursday as the Bank of England maintained its main rate at a record low of 0.50 percent and announced £50 billion in additional stimulus to boost Britain’s recession-hit economy.
The FTSE 100 index rose 0.14 percent to 5,692.63 points.
“It was all about the central banks today as investors awaited the latest decisions from both the Bank of England and European Central Bank at lunch time. But like last time, the Chinese central bank stole some thunder, cutting its own rate shortly before midday. This gave markets a boost, with the FTSE surging through 5700 ? but the press conference following the ECB announcement brought traders back down to earth, ” saidDavid Jones, Chief Market Strategist, IG Index.
“With ECB president Mario Draghi choosing to focus on the economic risks still facing the eurozone, he served to inject a rare note of caution back into stock markets ? something that we haven’t seen for a few weeks now,” he added.
The BoE also announced that it will hike its QE stimulus policy to a total of £375 billion over the next four months, following the conclusion of its latest monthly meeting.
Explaining the reasons for its own policy decisions, the central bank noted that the economy was still struggling.
“UK output has barely grown for a year and a half and is estimated to have fallen in both of the past two quarters,” it said.
“The pace of expansion in most of the United Kingdom’s main export markets also appears to have slowed. Business indicators point to a continuation of that weakness in the near term, both at home and abroad.”
It added that “concerns remain about the indebtedness and competitiveness of several euro-area economies, and that is weighing on confidence here” in Britain.
Lloyds Banking Group (LBG) and Vodafone remained the most traded issues, seeing 144 million and 90.8 million units changing hands respectively.
The session’s star performer was GKN, which added 13.11% — or 24.40 pence — to close at 211.
The vehicle engineering group said it had agreed to buy Volvo’s aerospace engine division for £633 million.
“GKN Plc today announces its agreement to acquire Volvo Aero,” said a statement. “The combination of GKN Aerospace and Volvo Aero creates a world leader in both aero structures and aero engine components,” it added.
This was closely followed by XStrata, which inched up 3.05% — or 25 pence — to end the session at 845.8. The miner rose on the back of potential merger talks with Glencore.
In contrast, the Royal Bank of Scotland suffered the most, down 3.40% — or 7.30 pence — to 207.20 after it was reported that the bank was involved in interest rate fixing.
Evrax was next, down 3.26% — or 8.70 pence — to stand at 257.8
On the currency markets, sterling slid back against both the euro and the dollar.
At 17:1, the pound was trading at $1.5532, down from $1.5589 at the same time Wednesday.
The British currency climbed against the single European currency, to 1.2534 euros from 1.2445 over the same period.
London shares rise
