London midday: Markets subdued as eyes turn to ECB

Markets were trading within a narrow range on Thursday as traders refrained from taking risk ahead of a potential rate cut from the European Central Bank (ECB) this afternoon.The consensus forecast is for a 25 basis-point cut in the ECB's key lending rate (the 'refi' rate) from 0.75% to 0.5%, given recent easing price pressures and weak economic data from across the Eurozone."Traders seem optimistic about a quarter-point cut, though many economists have called into question the effectiveness of such a move with banks seemingly unwilling to lend," said Matt Basi, Head of UK Sales Trading at CMC Markets.While headlines are likely to point to the (possible) cut in the refi rate, analysts have also raised concerns with what will happen to the deposit rate - the rate at which funds 'parked' at the ECB are remunerated - which is currently at zero. The deposit rate is normally kept below the main rate to discourage banks from parking funds.Chief Economist Simon Smith from FX Pro explained that if the deposit rate is pushed into negative territory, "the danger is that the ECB punishes well capitalised banks, who could then take money out of the Eurozone, a bigger negative factor for the euro than today's expected cut in the main rate".Last night saw the US Federal Reserve leave its $85bn-a-month asset purchase programme unchanged, as expected given the weaker-than-forecast economic growth in the first quarter. However, the Fed did acknowledge a more neutral stance on its next move, suggesting that it would ramp up quantitative easing (QE) in response to new data. Previously, the central bank had only said it would reduce QE if necessary.Economic figures from the Eurozone and the UK came in better than expectations this morning, but both purchasing managers' indices (PMIs) still pointed to a contraction in business activity across the regions: the UK construction PMI rose from 47.2 to 49.4 (forecast: 48), wile the Eurozone manufacturing PMI edged higher from 46.5 to 46.7 (forecast: 46.5).FTSE 100: Updates impress but miners provide a dragIt was a busy morning on the corporate front with a host of heavyweight constituents reporting trading updates and results, most of which were taken well by the markets.Oil giant Shell was higher as investors shrugged off the news of its CEO quitting and focused on forecast-beating profits in the first quarter. Sector peer BG Group advanced after saying that revenues rose 1.0% despite a slip in production volumes in the first quarter.Financial services group Legal & General was higher early on after hailing record assets, sales and cash generation in the first quarter of 2013 as its UK and US businesses exceeded management's expectations.RSA Insurance also gained after reporting an "encouraging" start to 2013 and saying that it remains on track to hit full-year targets after a good first quarter.Smith & Nephew, the medical technology firm, rose after revealing plans to give back $300m to shareholders via a share buyback. The company posted a 1.0% underlying increase in revenues in the first quarter.Earnings growth slowed slightly for British Sky Broadcasting in its traditionally quiet post-Christmas period, although customer numbers and average revenue per user continued to grow, causing shares in the pay-TV and broadband group to rise early on.Leading the downside was gold miner Randgold which unveiled a sharp drop in first-quarter profits following a decline in sales, production and gold prices. The stock was followed lower by sector peers Vedanta, ENRC and Rio Tinto.Financial outfit Schroders was also lower despite achieving growth in profits and assets under management at the start of the year.FTSE 250: Imagination tanks on profit warningChip maker Imagination Tech plummeted this morning after warning that profits would fall below expectations after delays to several deals hit licensing revenues.Multinational energy and environmental consultancy company RPS Group also fell sharply after saying that a slowdown in investment in resource projects in the Australia-Asia Pacific region has "reappeared". Liberum Capital downgraded the stock to 'hold'FTSE 100 - RisersBG Group (BG.) 1,119.50p +2.75%Imperial Tobacco Group (IMT) 2,360.00p +2.34%Legal & General Group (LGEN) 174.30p +2.17%Antofagasta (ANTO) 911.00p +1.79%Glencore International (GLEN) 319.80p +1.75%Royal Dutch Shell 'B' (RDSB) 2,292.50p +1.48%Royal Dutch Shell 'A' (RDSA) 2,222.00p +1.35%Smith & Nephew (SN.) 746.00p +1.29%WPP (WPP) 1,075.00p +1.03%Whitbread (WTB) 2,575.00p +0.98%FTSE 100 - FallersWeir Group (WEIR) 2,067.00p -4.13%Melrose Industries (MRO) 240.80p -3.68%IMI (IMI) 1,210.00p -2.89%Aggreko (AGK) 1,728.00p -2.87%CRH (CRH) 1,329.00p -2.64%Randgold Resources Ltd. (RRS) 4,988.00p -2.39%Wood Group (John) (WG.) 761.50p -2.12%Serco Group (SRP) 616.00p -1.91%ARM Holdings (ARM) 1,008.00p -1.75%BT Group (BT.A) 280.80p -1.72%FTSE 250 - RisersNew World Resources A Shares (NWR) 157.60p +4.37%NMC Health (NMC) 285.00p +3.00%Anite (AIE) 129.10p +2.30%Hansteen Holdings (HSTN) 86.75p +1.40%BH Macro Ltd. EUR Shares (BHME) € 21.90 +1.34%Playtech Ltd. (PTEC) 631.50p +1.28%Britvic (BVIC) 449.00p +1.13%Carillion (CLLN) 275.00p +1.10%Hochschild Mining (HOC) 249.40p +0.97%Halfords Group (HFD) 355.60p +0.88%FTSE 250 - FallersImagination Technologies Group (IMG) 332.40p -21.70%RPS Group (RPS) 223.70p -10.88%Inmarsat (ISAT) 685.50p -8.48%Home Retail Group (HOME) 139.30p -3.86%Spectris (SXS) 2,057.00p -3.43%Millennium & Copthorne Hotels (MLC) 536.00p -3.42%Bodycote (BOY) 503.00p -3.36%Ophir Energy (OPHR) 395.10p -3.28%International Personal Finance (IPF) 497.20p -3.08%Dignity (DTY) 1,383.00p -2.88%BC