BTG Share News (BTG)

LONDON (Alliance News) - Stocks in London were flat Thursday midday, losing morning gains after the bank of England kept UK interest rates on hold at 0.5% and its stock of purchased assets unchanged, in a surprising decision as many analysts expected the bank to ease monetary policy.

Gertjan Vlieghe was the only Monetary Policy Committee member to vote for a cut to 0.25%, in a 8-1 decision to keep rates on hold. The size of purchased assets was unanimously retained at GBP375 billion.

However, the BoE statement said "most members of the committee expect monetary policy to be loosened in August". BoE Governor Mark Carney had hinted last month of a summer rate cut.

"The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round," said the BoE. The next MPC meeting is on August 4.

The FTSE 100 was flat at 6,668.60, after two sessions of small losses which consolidated the strong gains made the three previous trading days.

The FTSE 250 was 0.1% higher at 16,761.65, while the AIM All-Share was down 0.3% to 725.58.

The pound stood at USD1.3220 prior to the BoE announcement, compared to USD1.3187 at the London close on Wednesday. Sterling spiked to USD1.3477 immediately after the bank's decision, standing at USD1.3347 shortly afterwards.

Investors earlier had reacted positively to the changes new UK Prime Minister Theresa May made to the Cabinet since she took office on Wednesday. Former London Mayor Boris Johnson was named foreign secretary, while David Davies became Brexit Secretary and Amber Rudd was chosen as Home Secretary. Michael Fallon stayed on as Defence Secretary.

Liam Fox was handed a brand new position as International Trade Secretary as May sought to pull together a team to deliver on the historic vote to leave the EU.

New Chancellor of the Exchequer Philip Hammond said the Leave vote has had a "chilling effect" on the UK economy and did not rule out the possibility of an economic slowdown, but said there will be no emergency budget.

"There is no plan for an emergency budget, as Theresa May made clear. There will be an Autumn Statement in the normal way and then there will be a Budget in the normal way," Hammond noted in ITV's Good Morning Britain.

Elsewhere, in the economic calendar, the US producer price index and initial and continuing jobless claims numbers are at 1330 BST. Initial claims expectations are for an increase to 265,000 from 254,000 in the past week, while economists see continuing claims growing to 2.128 million from 2.124 million.

Atlanta Federal Reserve Bank President Dennis Lockhart will speak at the Eighth Annual Rocky Mountain Economic Summit in Victor, Idaho at 1615 BST.

Highlights in the US corporate calendar Thursday are second-quarter results from banking and financial services firm JPMorgan Chase and investment management company BlackRock, both released before the Wall Street open as the US earnings season moves into full swing.

Stocks in New York were called higher, with the Dow 30, the S&P 500 and the Nasdaq Composite all seen up 0.5%.

In Asia, the Nikkei 225 index in Tokyo closed up 1.0%, while the Shanghai Composite ended down 0.2%. The Hang Seng in Hong Kong added 1.1%.

On the London Stock Exchange, miners were higher after JPMorgan raised its price target and recommendation on several companies in the sector. Anglo American was benefiting the most, up 4.2%, after being upgraded to Overweight from Underweight. Rio Tinto, up 2.9%, and BHP Billiton, up 1.5%, were supported by an increase to their price targets.

Accounting software firm Sage Group was up 2.9%, after being initiated at Buy by Deutsche Bank. "We see encouraging signs that Sage's old complacency has been replaced by a will to succeed in its changing landscape", said the German bank.

Among the few blue-chip decliners, Burberry Group, down 1.1%, was giving back some of the gains made on Wednesday. Shares in the company, known for its trenchcoats and scarves, rose 6.1% on Wednesday, when it said retail revenue grew in the first quarter to the end of June and upgraded its full year retail and wholesale profit guidance. This was due to a translational benefit it will get from the plunge in sterling in the aftermath of the Brexit vote.

These gains added to those on Monday, when Burberry appointed Marco Gobbetti as its new chief executive. Gobbetti, head of French high-end fashion house Celine, replaces Christopher Bailey, who was moved to the role of president and chief creative officer.

In the FTSE 250, SuperGroup was up 14%, the best mid-cap performer. The Superdry brand owner reported a fall in profit in its recently-ended financial year due to it booking higher one-off costs than the prior year, but revenue rose and the clothing store chain announced payment of its first special dividend. It will pay a total dividend of 23.2 pence, plus a special dividend of 20p for the year.

Software provider Micro Focus International was adding 8.5% after its pretax profit more than doubled in its recently-ended financial year thanks to strong revenue growth. However, the firm said it expected either a slight drop or flat revenue in its next financial year as it looks to implement its four-phase plan.

MoneySupermarket.com Group was up 8.1% after the price comparison service said it expects revenue for the first half of 2016 to grow around 10% year-on-year following a good performance across its divisions. The group said its anticipates revenue for the six months to the end of June will grow to GBP158.0 million. Revenue grew the same 10% in the second quarter to GBP74.0 million.

Adjusted operating profit, which strips out acquisition-related and one-off costs, is set to grow around 6.0% year-on-year in the half to GBP54.0 million, behind the revenue growth due to additional marketing spending.

Meanwhile, steel, mining and vanadium business Evraz was adding 4.5% after saying it has launched a new project to construct a new blast furnace in Russia by investing no more than USD170.0 million in 2017 and 2018.

At the other end of the index, healthcare company BTG was down 5.8%. It said its overall performance and trading since April 1 has been in line with expectations. Guidance is for revenue of between GBP485 million and GBP515 million. However, if sterling was to weaken even further against the dollar, revenue guidance would improve to between GBP510 million and GBP540 million,

BTG said if this were to happen, the foreign exchange benefit would be mostly offset in the short term by foreign exchange losses on existing forward contracts to hedge future US dollar cash flows.

By Daniel Ruiz; danielruiz@alliancenews.com

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