London midday: Stocks flat with central banks in focus

18th Jul 2012 11:48

- BoE could consider rate cut in future- UK unemployment falls- Bernanke comments will be closely watched The morning's gains were pared by Wednesday lunchtime as investors digested the minutes of the latest UK policy-makers' meeting and prepared for another testimony from Federal Reserve Chairman Ben Bernanke this afternoon.The majority of policy makers at the Bank of England (BoE) voted in favour of increasing quantitative easing at the last meeting, while the Monetary Policy Committee (MPC) were unanimous in their decision to maintain the Bank Rate. However, the Committee said that new initiatives, such as the BoE's Funding for Lending Scheme (FLS), which offers cheap funding to banks to encourage lending, could make a case for an interest-rate cut in the future. In other news, UK unemployment fell by 65,000 to 2.58m in the three months to May, according to the Office for National Statistics. The jobless rate dropped from 8.3% to 8.1%, better than the consensus estimate of 8.2%. Nevertheless, the number of people claiming jobless benefits rose by more than expected.European stocks were dampened yesterday by the Federal Reserve's semi-annual policy report to Congress as Chairman Ben Bernanke said that the central bank is "prepared to take further action as appropriate". The comments were more or less in line with his comments in the past, disappointing markets who were hoping for hints at further stimulus. Bernanke is due to testify again to Congress today.Analyst Craig Erlam from Alpari said this morning: "Bernanke did concede that the Fed will continue to look at a number of measures to stimulate the economy. However, given the response to the extension of Operation Twist last month, this doesn't exactly fill people with hope. Many are still hopeful that QE3 will at least be discussed at the next meeting in two weeks, but given the Fed's policy so far and their reasons for the lack of growth - Eurozone crisis and poor fiscal policy - this may be overly optimistic." FTSE 100: G4S and Fresnillo lead the risersSecurity solutions group G4S was performing well as it attempts to claw back some of the losses it has incurred over the last week - including today's gain, the stock is still down nearly 15% on last Wednesday. The group said on Monday that it will take a £35-50m loss on its Olympics contract.Silver and gold miner Fresnillo surged after notching up record levels of gold production in the second quarter while silver output was up quarter-on-quarter. Sector peer BHP Billiton also rose after achieving annual production records across ten of its operations in the year to the end of June. Fund managers Ashmore and Schroders were high risers early on after Goldman Sachs upgraded its ratings on the stocks to 'buy' and 'conviction buy', respectively. RSA Insurance was a heavy faller after the miserable weather over the past few months put a dampener on its full-year underwriting performance. Real estate group Land Securities fell despite saying that it has seen "good momentum" on lettings across all schemes in the first quarter. Land Secs and sector peer Hammerson were being pressured lower after Barclays Capital downgraded the stocks to 'equal weight'. Meanwhile, tobacco giant Imperial fell after going ex-dividend.Oil and gas giant Tullow edged higher after finding oil and gas-condensate at its Wawa-1 well offshore Ghana, likely to reassure shareholders who were disappointed on Monday after the firm plugged and abandoned a well in Guyana due to safety concerns. FTSE 250: Homeserve surges on M&A speculationHomeserve, the troubled emergency home repairs company, jumped despite denying it is in talks about a possible takeover. Shares were up nearly 14% by midday.Wireless technology and computer chip company CSR was in the red, pulling back after gaining over 30% the day before as it announced the sale of its handset connectivity technology business to Samsung. UBS downgraded the stock from 'buy' to 'neutral' this morning. FTSE 100 - RisersG4S (GFS) 247.20p +3.00%Fresnillo (FRES) 1,444.00p +2.56%Ashmore Group (ASHM) 329.50p +2.33%Capital Shopping Centres Group (CSCG) 334.10p +2.05%Marks & Spencer Group (MKS) 323.70p +1.70%Antofagasta (ANTO) 1,061.00p +1.63%Burberry Group (BRBY) 1,215.00p +1.59%Johnson Matthey (JMAT) 2,131.00p +1.33%Hargreaves Lansdown (HL.) 559.50p +1.27%Compass Group (CPG) 661.00p +1.15%FTSE 100 - FallersReed Elsevier (REL) 521.50p -2.16%Weir Group (WEIR) 1,479.00p -1.53%United Utilities Group (UU.) 688.00p -1.43%RSA Insurance Group (RSA) 106.90p -1.29%Imperial Tobacco Group (IMT) 2,517.00p -1.10%Admiral Group (ADM) 1,127.00p -1.05%Evraz (EVR) 248.00p -1.04%Tate & Lyle (TATE) 665.50p -0.82%HSBC Holdings (HSBA) 543.20p -0.77%ITV (ITV) 73.45p -0.74%FTSE 250 - RisersHomeserve (HSV) 188.80p +13.05%Ruspetro (RPO) 139.40p +7.23%Kenmare Resources (KMR) 32.90p +4.21%Hays (HAS) 69.10p +4.07%Imagination Technologies Group (IMG) 459.50p +3.61%Stobart Group Ltd. (STOB) 119.00p +3.39%Elementis (ELM) 185.00p +3.35%Avocet Mining (AVM) 69.60p +2.88%Yule Catto & Co (YULC) 134.00p +2.68%Booker Group (BOK) 88.55p +2.67%FTSE 250 - FallersMelrose (MRO) 218.50p -2.89%Morgan Crucible Co (MGCR) 261.70p -2.79%Petropavlovsk (POG) 417.50p -2.57%Hochschild Mining (HOC) 428.30p -2.50%Aquarius Platinum Ltd. (AQP) 40.47p -2.15%Perform Group (PER) 354.40p -2.10%Ferrexpo (FXPO) 192.60p -2.08%Afren (AFR) 116.00p -2.03%New World Resources A Shares (NWR) 309.00p -1.94%Essar Energy (ESSR) 113.00p -1.82%BC