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FTSE weighed down by financials, eyes on Bank of England

Stock MarketsDec 14, 2017 09:41
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© Reuters. FILE PHOTO:A sign displays the crest and name of the London Stock Exchange in London

By Danilo Masoni

MILAN (Reuters) - The UK's top share index slipped on Thursday, weighed down by losses among financial stocks, while among positive commodity stocks, miner Lonmin (L:LMI) soared after a takeover bid.

The FTSE index was down 0.14 percent at 7,486 points by 0920 GMT, while mid-caps (FTMC) were 0.46 percent lower.

HSBC (L:HSBA), Lloyds (L:LLOY) and Standard Chartered (L:STAN) weighted on the FTSE, as global banking stocks were hit by the tone from the U.S. Federal Reserve - less hawkish than expected - following its expected rate hike.

Later in the session the Bank of England's policy meeting is widely expected to keep rates on hold and the focus will be on its views about Brexit, following Prime Minister Theresa May's parliamentary defeat on Wednesday.

"The BoE will continue to be overshadowed or influenced by Brexit talks... However, the improvement in economic data and a surge in inflation above 3 percent might pressure the central bank to tighten policy further in 2018," Hussein Sayed, Chief Market Strategist at FXTM, said in a note.

The BoE raised rates for the first time in a decade last month but it is expected to wait nearly a year before raising rates again, as the economy slows amid Brexit uncertainty.

"All of the language post the BoE rate hike has been quite dovish. They're not in a rush to hike rates again. So any change in that rhetoric will be interesting," said Rory McPherson, head of investment strategy at Psigma Investment Management.

Among stand out movers on Thursday was Lonmin (L:LMI). Its shares soared 19 percent after South Africa's Sibanye-Stillwater (J:SGLJ) agreed to buy the company in a deal that valued the troubled platinum producer at about 285 million pounds.

"We would take this offer... Looking longer term, the offer gives Lonmin investors the haven of a larger more robust group able to fund the likely catch up of sustaining capital over the next few years," said Peel Hunt analysts.

Elsewhere among commodity stocks, heavyweights Rio Tinto (L:RIO) rose 0.8 percent and Royal Dutch Shell (L:RDSa) added 0.4 percent, as the sector was supported by mild gains among oil and metal prices.

Elsewhere on the FTSE, Bunzl (L:BNZL) was among the biggest losers, down 1.1 percent, after the business supplies distributor reported results.

Top gainer was BT Group (L:BT), which rose 2.5 percent, supported by an upgrade to buy at UBS.

Among mid caps Capita (L:CPI) declined 13 percent after the outsourcer signalled a difficult 2018. Capita said it was on track to hit its full-year profit target but said upcoming work was unlikely to provide an immediate boost and that the market for major contracts was still "subdued".

Ocado (L:OCDO) inched up 0.3 percent after the online grocer suffered a slow down in retail sales growth in its latest quarter, hurt by a shortage of drivers.

FTSE weighed down by financials, eyes on Bank of England

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