FTSE 100 Up After Bank's Deputy Governor Says He Is Not Ready To Back Rates Rise

FTSE 100 Up After Bank's Deputy Governor Says He Is Not Ready To Back Rates Rise
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Dovish comments by Bank of England deputy governor Ben Broadbent helped bolster the FTSE 100 on Wednesday, as the lower likelihood of an interest rate hike tempered gains by the pound.

London's blue chip index ended the day higher by 1.19% or 87.17 points at 7,416.93, maintaining momentum after Mr Broadbent said he was not yet ready to vote for a rate hike.

Those comments initially weighed on the pound, which fell to 1.281 versus the US dollar in morning trading, but was later boosted by UK data showing that unemployment fell to a 42-year low.

David Madden, a market analyst at CMC Markets UK, said Mr Broadbent's dovish comments seemed to be part of "a very much wait and see attitude."

"Investors quickly jumped on the buying bandwagon, and the decline in the London market over the past five weeks made it a good time for bargain hunting.

"The drop in UK unemployment and increase in average wages pushed up the value of the pound but it didn't prevent the FTSE 100 from moving higher throughout the day," he explained.

"The news proves that the loose monetary policy by the Bank of England is working. "

The pound was up 0.3% versus the US dollar at 1.288 in afternoon trading, and rose 0.8% against the euro to 1.129.

Across Europe, the French Cac 40 and German Dax ended the day higher, by nearly 1.6% and 1.5% respectively.

In oil markets, Brent crude prices dipped 0.8% to 47.72 US dollars per barrel despite the release of data showing a larger than expected drop in US crude inventories last week.

In UK stocks, Royal Dutch Shell's 'B' shares rose 36p to 2,092p after agreeing to offload its 45% stake in an Irish gas project in a deal worth up to 1.23 billion US dollars (£956 million), ending its exploration and production in the country.

Burberry shares rose 50p to 1,630p as the luxury retailer reported a 3% increase in retail sales to £478 million in the three months to June 30, while like-for-like sales rose 4%.

Carillion shares plunged 20.7p to 57.2p, taking a further hit after it warned over earnings and an £845 million write-off on construction contracts earlier this week. The construction and infrastructure giant has lost nearly two-thirds off its stock market value since Monday.

Amec Foster Wheeler tumbled 25p to 430p after the company was dragged into a Serious Fraud Office probe into alleged bribery and corruption at Monaco-based energy firm Unaoil. It comes amid plans for a takeover by Wood Group, which also saw shares slump 22p to 601p.

The biggest risers on the FTSE 100 were Mediclinic International up 33.5p to 742.5p, Burberry Group up 50p to 1,630p, Antofagasta up 26p to 854p, and Shire up 111p to 4,270p.

The biggest fallers on the FTSE 100 were Micro Focus International down 178p to 2,020p, Pearson down 31p to 624p, Kingfisher down 8.4p to 293.6p, and Marks and Spencer Group down 6.9p to 316.2p.