London midday: BoE holds fire; all eyes now on the ECB

2nd Aug 2012 11:44

- BoE maintains rates, QE- ECB decision in focus- RBS lower on nationalisation speculation While the policy-makers at the Bank of England (BoE) did what most were expecting - leaving interest rates and quantitative easing (QE) unchanged - UK stocks were trading firmly higher on Thursday morning as investors looked to the European Central Bank (ECB) to provide a well-needed boost to the struggling Eurozone economy.The BoE's Monetary Policy Committee (MPC) maintained its Bank Rate at 0.5% and its asset purchase programme at £375bn today. The decisions were widely expected by economists in spite of the BoE hinting at a potential rate cut at its last meeting. The current QE programme is due to run until November; analysts at Barclays Capital are expecting the central bank to wait until then before making any changes.However, the big event of the day will most likely be the ECB's policy decision and following press conference this afternoon. Last week, ECB President Mario Draghi said that he was prepared to do do "whatever it takes to preserve the euro...and believe me, it will be big enough". "Today, ECB President Draghi will restate his commitment to intervening in the sovereign-debt market if needed. For the time being, however, the ECB will probably prefer other measures (involving EFSF money) being adopted," said analysts at UniCredit this morning in an e-mailed report.Stateside, the Federal Reserve Open Market Committee yesterday decided to leave all its main policy settings unchanged, including most of the language employed in its post-meeting statement. While Fed Chairman Ben Bernanke noted that the recovery had lost momentum - leading to suggestions that more QE may be on the way - analyst Craig Erlam from Alpari said this morning: "Bernanke's comments appeared very similar to those of the previous meetings and with the Fed reaffirming their commitment to Operation Twist until the end of the year, I'd be surprised to see QE3 announced next month."FTSE 100: RBS down on nationalisation rumours; Schroders and Smith & Nephew gainAccording to the Financial Times, the government is considering buying up the remaining shares in Royal Bank of Scotland (RBS) that it does not already own in an effort to kick start lending to businesses. The paper claims ministers are becoming "exasperated" that the bank, which is 83% owned by the taxpayer, is not lending enough to the British economy. Asset manager Schroders advanced after reporting an increase in assets under management over the first half; however, profits slipped year-on-year. Medical devices specialist Smith & Nephew rose despite reporting a slight decline in second-quarter trading profit and revenue, as it whacked up its dividend, embarking on a progressive dividend policy on the back of the success of its recent restructuring. Heading the other way was temporary power and temperature control group Aggreko after its first-half figures. Investec analysts said this morning that the results were "excellent" but the lack of upgrades to consensus forecasts are likely to disappoint.Also lower was defence contractor BAE Systems which is suffering from reduced military spending in both the US and UK, while a crucial fighter jet deal with Saudi Arabia has been hit by delays. First-half sales were down 11%. FTSE 250: Spirent and Ophir provide a dragCommunications technology firm Spirent Communications was heavy faller after it cautioned that overall growth in the second half may reduce to mid- to low-single digit increase amid ongoing macro-economic uncertainty. High-flying Ophir Energy also disappointed the market as it revealed its gas discovery at the Papa-1 well off the coast of Tanzania is likely to contain lower recoverable resources than it had hoped for. Leading the upside was industrial property group SEGRO after saying that pre-tax profits gained 5.3% in the first half despite net rental income falling by 3.4%. The firm also reported today that it has completed the sale of a portfolio of 10 non-core UK industrial estates for £110m. FTSE 100 - RisersSchroders (SDR) 1,338.00p +3.56%Smith & Nephew (SN.) 677.00p +2.65%Randgold Resources Ltd. (RRS) 5,775.00p +1.67%Admiral Group (ADM) 1,155.00p +1.67%BP (BP.) 434.85p +1.59%HSBC Holdings (HSBA) 549.10p +1.57%Barclays (BARC) 170.80p +1.49%RSA Insurance Group (RSA) 111.60p +1.45%Next (NXT) 3,475.00p +1.40%Royal Dutch Shell 'A' (RDSA) 2,228.00p +1.32%FTSE 100 - FallersRoyal Bank of Scotland Group (RBS) 212.20p -1.49%BT Group (BT.A) 215.90p -1.33%Rolls-Royce Holdings (RR.) 853.00p -1.27%Aggreko (AGK) 2,096.00p -1.13%IMI (IMI) 824.00p -1.08%BAE Systems (BA.) 309.20p -1.02%Vedanta Resources (VED) 961.00p -0.98%Morrison (Wm) Supermarkets (MRW) 275.20p -0.97%Serco Group (SRP) 580.50p -0.94%Anglo American (AAL) 1,902.50p -0.91%FTSE 250 - RisersSEGRO (SGRO) 240.10p +5.86%Halfords Group (HFD) 208.90p +2.65%Brown (N.) Group (BWNG) 268.00p +2.41%Henderson Group (HGG) 100.30p +2.35%Ted Baker (TED) 900.00p +2.27%FirstGroup (FGP) 235.10p +2.13%JD Sports Fashion (JD.) 699.50p +2.12%International Personal Finance (IPF) 290.80p +2.11%Carpetright (CPR) 599.00p +1.96%BH Global Ltd. USD Shares (BHGU) 11.47 +1.96%FTSE 250 - FallersSpirent Communications (SPT) 143.80p -14.66%Ophir Energy (OPHR) 538.50p -7.55%Aquarius Platinum Ltd. (AQP) 35.56p -4.66%Avocet Mining (AVM) 82.10p -2.96%Kentz Corporation Ltd. (KENZ) 369.00p -2.64%Cookson Group (CKSN) 543.50p -2.60%Laird (LRD) 220.80p -1.95%Hunting (HTG) 773.00p -1.78%Dairy Crest Group (DCG) 334.30p -1.68%Bumi (BUMI) 342.40p -1.61%BC