Interest rate news fails to lift FTSE
The London market struggled for direction today as the latest update on interest rates failed to lift spirits in the Square Mile.
Minutes from the Bank of England’s Monetary Policy Committee cast some doubt on a rise in the cost of borrowing in the short-term but it was met with indifference by investors.
Instead, disappointing corporate news from HBOS, Sainsbury’s and Currys owner DSG International dragged the FTSE 100 Index 30.9 points lower to 5627.3 by mid-morning.
Stock markets around the world have been rocked in recent weeks by the threat of higher inflation and subsequent rises in interest rates but today’s more reassuring update from the Bank of England did little to help shares in London.
DSG moved towards the top of the blue chip fallers board – down 4.5p to 188.75p – as confirmation that it planned to offload its struggling The Link chain failed to divert attention away from falling profits.
It was followed down by Halifax and Bank of Scotland owner HBOS, which lost 21p to 932p after a trading statement was not as bullish as investors had hoped. HBOS said it was “comfortable” with analysts’ forecasts that underlying profits for 2006 would rise to £5.2bn (€7.59bn) from £4.8bn (€7bn) a year earlier.
The indifference spread across the banking sector as Alliance & Leicester shares dipped 10p to 1115p and Lloyds TSB shares fell 5.5p to 519.5p.
Sainsbury’s shares were also down 4.25p to 318.75p after an upbeat trading statement showed like-for-like sales excluding petrol leapt 5.7% in the first quarter of the year but failed to update on profits margins.
But ITV went in the opposite direction after its trading update was in line with expectations in the City.
Shares ticked 1.25p higher to 103.75p after it said it expected total advertising revenues to slide 4.6% to £750m (€1bn) in the first half of the year.
