* BOE cuts rates by 50 basis points
* G4S second-biggest loser on midcap index
* Travel and leisure stocks drop
(Updates to close)
By Shivani Kumaresan and C Nivedita
March 11 (Reuters) - London stocks gave up early gains on
Wednesday as investors doubted whether a Bank of England rate
cut and a 30 billion-pound ($39 billion) economic stimulus plan
would be enough to counter the shock from the coronavirus
outbreak.
The central bank cut rates by 50 basis points to a record
low of 0.25%, following a similar move from the U.S. Federal
Reserve last week and announced support for bank lending, which
initally lifted the London stocks.
"Trying to solve a debt crisis by encouraging more borrowing
has perhaps kept the plates spinning for a bit longer but it has
not provided a sustainable base for the real economy or
financial markets," said Russ Mould, AJ Bell investment
director.
The FTSE 100 closed down 1.6%, extending a slump
into a fifth day, with the travel and leisure index
clocking the biggest fall. The FTSE mid 250 index fell
1.2%.
The food and drug retailers index and the
general retailers index slid about 3%.
Britain also launched the stimulus plan as new finance
minister Rishi Sunak, presenting his budget statement to
parliament, said the economy faced a "significant impact" from
the spread of the virus, even if it was likely to be temporary.
"The primary effects of the coronavirus outbreak have so far
been to reduce supply by keeping people off work and disrupting
supply chains – which means monetary policy isn’t the ideal
tool, but a rate cut can help support demand and take some
pressure off small businesses," said Hargreaves Lansdown equity
analyst William Ryder.
"This isn't a silver bullet, and won't stop the spread of
the coronavirus, get sick people back to work or fix broken
supply chains – but it’s something – in fact it’s almost
everything the bank has – although they’re yet to extend QE."
On Tuesday, Junior Health Minister Nadine Dorries tested
positive for coronavirus, which has so far infected 456 people
and killed six in Britain.
Second biggest loser on mid-cap index, G4S, one of
the world's largest private security firms, fell 22.6% after
posting an annual statutory loss as it took a charge related to
its UK cash business.
Car dealership Lookers sank 32.7% after it
identified potentially fraudulent transactions in one of its
operating divisions and postponed its annual results until the
second half of April.
(Reporting by Shivani Kumaresan and C Nivedita in Bengaluru;
Additional reporting by Sruthi Shankar and Devik Jain; Editing
by Bernard Orr and Alison Williams)
