London close: Stocks finish higher after BoE rate cut and QE

UK equities finished on a high note on Thursday after the Bank of England cut interest rates and increased the size of its asset purchase programme.

The BoE's Monetary Policy Committee voted unanimously to lower interest rates for the first time since 2009, which follows a raft of weak economic data and the UK's vote to leave the European Union.

Rate-setters also voted 6-3 on raising the asset purchase programme by £60bn to £435bn.

BoE also launched a scheme to buy £10bn of corporate bonds in the next 18 months while a Term Funding Scheme was introduced alongside it to encourage banks to keep lending after the cut to Bank Rate.

“For once, the man (BoE Governor Mark Carney) so often dubbed the unreliable boyfriend has turned up with a bunch of flowers and a box of chocolates,” said IG market analyst Joshua Mahony.

“For once he over delivered. If there is anything that markets love, it is QE, as Mario Draghi can certainly attest.”

At the same time, the central bank left its forecast for growth this year at 2% but lowered its estimate for 2017 growth to 0.8% from a previous projection of 2.3%.

The BoE said in its August Quarterly Inflation Report that a majority of MPC members expect to support a further cut to interest rates at one of the upcoming policy meetings this year if economic data worsens.

"The MPC currently judges this bound to be close to, but a little above, zero," the Bank said.

The pound fell 1.38% against the dollar at $1.3140 at 1500 BST as a result.

Elsewhere, US initial jobless claims rose 3,000 to 269,000 in the week to 30 July, according to the Labor Department. Economists had been expecting a reading of 265,000.

The data comes ahead of Friday’s all-important non-farm payrolls report which is expected to show employers added 175,000 jobs in July, compared to 287,000 in June.

Another report from the Commerce Department showed factory orders dropped 1.5% in June from a year ago, better than the 1.9% fall expected.

In company news, Aviva rallied as the insurer’s interim results for the six months to 30 June showed operating profit rising 13% to £1.325bn and operating earnings per share improving 1% to 22.4p.

Fellow insurers Prudential and RSA Insurance Group were also in the black.

Hikma Pharmaceuticals was under pressure after the drugmaker's overnight warning that delays to new US generic products would lower profits in the first half.

Serco shares surged after the group said it swung to a profit in the first half as it lifted its guidance for the year.

Cobham declined after the aerospace and defence group said it swung to a loss in the first half and cut its interim dividend.

Market Movers

FTSE 100 (UKX) 6,740.16 1.59%
FTSE 250 (MCX) 17,244.32 1.45%
techMARK (TASX) 3,484.43 1.28%

FTSE 100 - Risers

Aviva (AV.) 411.40p 6.86%
Standard Chartered (STAN) 646.00p 5.16%
Intu Properties (INTU) 306.10p 3.76%
Paddy Power Betfair (PPB) 8,835.00p 3.76%
BHP Billiton (BLT) 982.90p 3.62%
Old Mutual (OML) 215.00p 3.37%
Prudential (PRU) 1,350.00p 3.13%
Royal Dutch Shell 'B' (RDSB) 1,964.50p 3.12%
Hammerson (HMSO) 562.00p 3.12%
Royal Dutch Shell 'A' (RDSA) 1,890.50p 2.94%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 2,219.00p -16.83%
Randgold Resources Ltd. (RRS) 8,635.00p -3.84%
Next (NXT) 5,200.00p -2.62%
Lloyds Banking Group (LLOY) 52.11p -1.66%
SABMiller (SAB) 4,361.00p -1.01%
GKN (GKN) 293.20p -0.81%
Marks & Spencer Group (MKS) 316.90p -0.63%
TUI AG Reg Shs (DI) (TUI) 964.00p -0.21%
Rio Tinto (RIO) 2,419.00p -0.17%
ARM Holdings (ARM) 1,687.00p -0.00%

FTSE 250 - Risers

Serco Group (SRP) 131.20p 10.53%
Pets at Home Group (PETS) 260.20p 8.92%
AA (AA.) 258.20p 6.69%
Inmarsat (ISAT) 829.00p 6.21%
Hill & Smith Holdings (HILS) 1,141.00p 6.14%
Tullow Oil (TLW) 196.60p 5.98%
Evraz (EVR) 170.60p 5.31%
BGEO Group (BGEO) 2,808.00p 4.50%
Ladbrokes (LAD) 144.30p 4.26%
Homeserve (HSV) 564.50p 3.96%

FTSE 250 - Fallers

Halfords Group (HFD) 341.80p -3.17%
OneSavings Bank (OSB) 200.60p -2.90%
Hochschild Mining (HOC) 285.90p -1.92%
Indivior (INDV) 290.00p -1.79%
Brown (N.) Group (BWNG) 170.20p -1.79%
Cobham (COB) 165.00p -1.79%
Rank Group (RNK) 214.90p -1.78%
P2P Global Investments (P2P) 804.50p -1.77%
CYBG (CYBG) 255.50p -1.77%
QinetiQ Group (QQ.) 219.20p -1.70%