LONDON (Alliance News) - London shares are lower Thursday midday, while the Bank of England left UK interest rates at hold but the Monetary Policy Committee did not vote unanimously for the first time since December, with one member voting to lift rates.
The Bank of England left its interest rate at 0.5% and assets purchase target at GBP375 billion. However, one of the Monetary Police Committee members, Ian McCafferty, voted to hike the base rate by 25 basis points, meaning the MPC vote was 8-1. Analysts were broadly expecting a 7-2 vote, as they expected MPC member Martin Weale to join McCafferty on supporting a lift of interest rates.
Bank of England Governor Mark Carney's press conference is expected at 1245 BST.
The pound declined sharply after the BoE decision to USD1,5512 after standing at USD1,5611 prior to it.
The FTSE 100 eroded previous losses after the BoE decision but is still down 0.1% at 6,749.87. The FTSE 250 is down 0.1% at 17,758.52 and the AIM All-Share is down 0.3% at 754.17. In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt are both flat.
The Bank of England decision comes after the pound weakened after UK industrial production declined unexpectedly in June, while manufacturing output recovered from the prior month, data from the Office for National Statistics revealed. Industrial output dropped 0.4% in June from May, when it was up 0.3%. This was the first fall in five months. Production was forecast to rise marginally by 0.1%. On a yearly basis, industrial production growth eased to 1.5% from 1.9%, below expectations to improve to 2.2%.
Meanwhile, manufacturing output grew 0.2%, reversing a 0.6% drop in May. Economists had forecast 0.1% rise. On an annual basis, growth in manufacturing halved to 0.5% from 1.0% in May.
Elsewhere in the UK economy, house prices dropped unexpectedly in July from June, data from Lloyds Banking Group's Halifax division revealed. House prices decreased 0.6% from June, which was the first fall in five months and confounding expectations for a 0.4% rise. Prices had increased 1.6% in June. The annual house price growth eased for three months to July, to 7.9% from 9.6% in June and was at its lowest since December 2014. Prices were expected to rise 8.3%.
Meanwhile, US futures point to a mixed open, with the DJIA pointed down 0.1%, the S&P 500 pointed flat and the Nasdaq 100 seen up 0.1%.
As US investors focus on a potential US interest rate hike from the US Federal Reserve in September, the US economic calendar Thursday includes US initial and continuing jobless claims at 1330 BST, and the National Institute of Economic and Social Research's UK GDP estimate at 1500 BST.
These data will follow a report from payroll processor ADP released on Wednesday that showed that the pace of US private-sector job growth slowed by more than expected in July.
However, some analysts point to Friday's labour market report, expected at 1230 BST.
"Today's weekly jobless claims data are a sideshow as the we focus on tomorrow's labour market report. The importance of this release has been exaggerated by the sense that the Federal Open Market Committee is now ready to raise rates, barring bad news," writes Societe Generale analyst Kit Juckes.
On the London Stock Exchange, Inmarsat is the best performer in the FTSE 100, trading up 4.3%. The satellite communications company said its pretax profit declined in the first half of 2015 following a sluggish second quarter, which was hit by delays to the launch of its third Global Xpress satellite and to the launch of its GX global commercial service.
The company said its pretax profit was USD165.9 million in the first half, down from USD168.3 million a year before, as revenue fell to USD616.2 million from USD652.3 million. Inmarsat did sweeten the message for investors, however, with a 5% hike to its interim dividend to 19.61 US cents from 18.68 cents a year earlier.
Anglo-South African financial services company Old Mutual is up 4.3% after it reported a 19% increase in adjusted operating profit for the first half of 2015, and increased its interim dividend by 8%.
It said its adjusted operating profit amounted to GBP904 million in the six months to the end of June, a 20% increase at constant currency. Old Mutual increased its interim dividend to 2.65 pence from 2.45p. Funds under management increased to GBP335.7 billion, up 5% on a reported basis and by 7% at constant currency.
BP is amongst the worst performers in the FTSE 100, trading down 2.9% after going ex-dividend, meaning new buyers no longer qualify for the latest dividend payout. The stock also has been hit by another fall in oil price, with Brent hitting a low of USD49.33 a barrel, while US benchmark West Texas Intermediate set a new four month low of USD44.80 a barrel.
In the AIM All-Share index, Sound Oil is up 8.5%. The Mediterranean-focused upstream gas company said it has signed a gas sales agreement for the Casa Tonetto production concession, with Shell Energy Italia. Sound Oil said the Casa Tonetto production concession will include the Nervesa gas field. Shell Energy Italia is the local arm of Shell Energy Europe, which is Royal Dutch Shell's gas, power and emissions trading entity in Europe.
In the red, however, is Quindell, down 26%. The embattled insurance technology and outsourcing company saw its shares plunge as they were restored to trading on Thursday morning, following the publication of its 2014 results on Wednesday, showing a large loss, and the news that the Serious Fraud Office is conducting an investigation into its accounting woes.
By Daniel Ruiz; danielruiz@alliancenews.com
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