By Carla Mozee, MarketWatch
Bank of England holds key rate at record low
U.K. stocks slipped Monday, pulling back after last week's post
general-election rally, but miners held to higher ground after
China made another move to stimulate its economy.
Meanwhile, the pound (GBPUSD) reached a new high for 2015 as
investors turned their focus to the Bank of England's upcoming
inflation report.
The FTSE 100 equity benchmark ended 0.2% lower at 7,029.85,
weighed down by losses among consumer-goods, financial and
health-care shares.
The FTSE 100 on Friday jumped 2.3%
(http://www.marketwatch.com/story/ftse-100-pound-leap-with-conservatives-on-track-for-election-win-2015-05-08)
after the country's general election resulted in the Conservative
Party taking a slim majority in the U.K. parliament. Read: Time to
jump into U.K. stocks, says Credit Suisse
(http://www.marketwatch.com/story/time-to-jump-into-uk-stocks-says-credit-suisse-2015-05-11)
Leading decliners, building-materials company CRH PLC fell 2.9%,
cutting into last week's climb of more 4.5%, and shares of wealth
management firm St. James Place PLC ended 2.3% lower.
But at the top of the FTSE 100 was Royal Mail PLC , with shares
leaping 3.9% after competitor Whistl said it will suspend its
door-to-door letter delivery service. The move comes after Dutch
postal company PostNL and private-equity firm LDC in April ended
talks about expanding Whistl in Britain.
Mining stocks also rose, after the People's Bank of China's
decide on Sunday to cut its benchmark lending and deposit rates by
a quarter of a percentage point
(http://www.marketwatch.com/story/china-cuts-rates-as-economic-slowdown-deepens-2015-05-10).
The third rate cut in six months highlights concerns about slowing
in the world's second-largest economy. China is a major buyer of
metals and other commodities.
Glencore and Anglo American PLC shares rose 1.1%, as did Rio
Tinto PLC (RIO) . BHP Billiton PLC (BHP) added 0.7%.
Sterling: The pound was trading at $1.5592, surpassing $1.5583
which had previously been the highest level for the currency this
year. The pound late Friday bought $1.5375.
Sterling gained as investors turned their focus to the bank's
quarterly inflation report, due Wednesday, and "two important
factors will be wage inflation and core inflation. Given that oil
prices have bounced fairly rapidly from their lows, the footprint
will start emerging rather sooner," said Naeem Aslam, chief market
analyst at AvaTrade, in a note.
Momentum for the U.K. economy has shown signs of picking up and
"given the election uncertainty is over, we are expecting [Bank of
England Governor Mark] Carney to increase his drum beat and show
more of his hawkish side," said Aslam.
The prospect of higher interest rates tends to be supportive for
a country's currency.
Earlier Monday, the Bank of England met market expectations by
leaving the benchmark interest rate at a record-low 0.5%. Its
quantitative-easing program was also left unchanged, at 375 billion
pounds ($579.5 billion).
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