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(Alliance News) - The FTSE 100 underperformed on Thursday, posting minor losses despite European peers delivering chunky gains, as a resurgent pound kept a lid on London's large cap index.
Sterling climbed following the Bank of England's latest monetary policy decision as two policymakers voted for an early end to the central bank's ongoing asset purchase programme.
"There were no surprises in as far as the actual policy inaction was concerned from the Bank of England. But the pound rallied as the devil was in the detail of the policy statement. What seemed to cause a bit of a surprise was the BoE's assessment that the case for modest tightening of monetary policy appears to have strengthened," ThinkMarkets analyst Fawad Razaqzada commented.
The FTSE 100 index closed down 5.02 points, or 0.1%, at 7,078.35. The large cap index was 0.7% higher earlier in the session.
The mid-cap FTSE 250 index ended up 45.64 points, 0.2%, at 23,830.18. The AIM All-Share index closed up 4.27 points, 0.3%, at 1,272.40.
The Cboe UK 100 index ended down 0.1% at 703.68. The Cboe 250 ended marginally lower at 21,611.61. The Cboe Small Companies rose 0.3% to 15,593.36.
In mainland Europe, the CAC 40 stock index in Paris surged 1.0% and the DAX 40 index in Frankfurt rose 0.9%.
"It's been another positive day for European markets, up for the third day in a row, despite evidence that the broader economy is slowing. The FTSE 100 for its part has done its best to reprise its role as the perennial party pooper, sliding back from its intraday highs, and struggling to close in positive territory. Some of that may be down to the sharp rise in the pound, and sharp rise in gilt yields," CMC Markets analyst Michael Hewson commented.
The pound was quoted at USD1.3736 at the London equity market close on Thursday, up from USD1.3659 on Wednesday.
The Bank of England's nine-strong Monetary Policy Committee voted unanimously to keep Bank Rate at 0.1%. It also kept the asset purchases steady at GBP895 billion, as widely expected.
However, the vote to maintain quantitative easing at the current pace was not unanimous, with a majority of 7 to 2. The central bank said Dave Ramsden joined Michael Saunders in voting against the proposition, preferring to reduce the target for the stock of UK government bond purchases to GBP840 billion from GBP875 billion.
Banking stocks were among the best large cap performers on Thursday in London. Lloyds rose 2.5% and Barclays added 1.5%.
Conversely, the London-listed gambling sector gave up some strong, M&A-driven gains. Entain, which has received a takeover offer from betting and fantasy sports firm Draftkings, fell 4.3%, though the Ladbrokes owner is up 19% so far this week.
Paddy Power owner Flutter fell 1.8% and 888 Holdings lost 4.6%.
Telecom Plus topped the FTSE 250 index, rising 6.0%. The company owns the Utility Warehouse gas and electricity provider in the UK.
Concerns about the energy industry continued. At least 1.5 million consumers have seen their suppliers go to the wall in recent weeks after the energy sector was hit by rocketing global wholesale gas prices.
Business minister Paul Scully confirmed there is pressure on the energy price cap, which he said is saving dual-fuel energy customers around GBP100 per year, but that it will be up to the regulator Ofgem to determine if it should rise.
The cap is currently due to next be reviewed in April.
Brent was quoted at USD75.94 a barrel Thursday evening, higher against USD77.04 a barrel late Wednesday. The North Sea benchmark was trading around its best level since July.
Gold stood at USD1,748.28 an ounce, down from USD1,778.80.
The euro was priced at USD1.1735 at the European equities close on Thursday, down from USD1.1738 on Wednesday. Against the Japanese yen, the dollar was trading at JPY110.18, up from JPY109.57.
The euro was hurt after a survey of eurozone business activity pointed to slower growth in September, Markit said, as bottlenecks curb activity and the input price gauge hit 21-year high. The flash headline composite purchasing managers' index fell sharply in September to 56.1 points from 59.0 points in August.
Any score above 50 represents growth, but the latest increase in business activity was the weakest since April, albeit still well above the survey's pre-pandemic long-run trend.
Making for a similarly tough reading, growth in the US private sector slowed to a one-year low in September, estimates on Thursday showed, with virus worries continuing to hurting the services sector and cost inflation hitting the manufacturing industry.
IHS Markit's flash US composite purchasing managers' index fell to 54.5 points in September, from 55.4 in August. September's flash figure was a 12-month low. The indicator reached a record tally of 68.7 back in May, but growth has ebbed every month since then.
The flash services PMI came in at a 14-month low of 54.4 points, down from 55.1 points in August. The flash manufacturing PMI slipped to a five-month low of 60.5 points, from 61.1 in August.
In addition, US initial jobless claims rose for the second straight week as the Delta variant of Covid-19 continues to hinder the job market recovery, figures from the Department of Labor showed.
In the week to September 18, there were 351,000 initial jobless claims, an increase of 16,000 from the previous week's revised level of 335,000. The latest reading was higher than the market forecast, cited by FXStreet, of 320,000 claims.
Equity prices in New York rose, however. The Dow Jones Industrial Average surged 1.5% at the time of the equities close in London. The S&P 500 was up 1.2% and the Nasdaq Composite was 0.9% higher.
Enterprise-software company Salesforce.com topped the Dow, rising 5.2%. It boosted its full-year guidance ahead of an investor day presentation.
After an outlook upgrade just last month, Salesforce said it now expects full-year revenue in a range of USD26.25 billion to USD26.35 billion.
At the end of August, alongside its second quarter results, the firm raised its full-year guidance range to USD26.2 billion to USD26.3 million from a prior one of USD25.9 billion to USD26.0 billion. Revenue for the 2021 financial year came in at USD21.25 billion.
The firm on Thursday also shed light on guidance for its 2023 financial year, expecting revenue between USD31.65 billion to USD31.80 billion - which at most would be an uplift of more than 20% on its guidance for the current financial year.
Friday's economic calendar has flash manufacturing data and inflation numbers from Japan overnight before Ifo's business climate index for Germany at 0900 BST.
Friday's corporate calendar has third quarter results from cruise ship firm Carnival.
By Eric Cunha; ericcunha@alliancenews.com
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