London close: Stocks rise as BoE to try again after QE shortfall

London stocks recovered on Wednesday as the Bank of England said it would try again after failing to reach its target for government bond purchases the day before.

The central bank on Tuesday said it bought £1.12bn of gilts on the second day of its new programme, falling short of its intention to purchase £1.17bn as part of its £60bn six-month commitment. However, the BoE said it would make up the shortfall in the next three to six months.

The FTSE 100 was lower in earlier trading but regained strength to finish up 0.22% to 6,866.42 points.

“It’s hard to know what to say about this afternoon’s trading for the simple fact that, bar the Bank of England QE kerfuffle, not a lot has happened, the markets suffocated by the summer lull,” said Connor Campbell, financial analyst at Spreadex.

Separately, the Bank released the results of a survey on Wednesday showing business services growth and consumer spending slowed in July following the UK’s vote to leave the European Union.

The BoE's monthly report from its network of agents said the easing in business services growth reflected weakness in commercial property investment and corporate transactions.

"Consumer spending growth had also slowed, although that appeared to have partly reflected the effects of unusually wet weather," it added.

Meanwhile, oil prices wavered after the US Energy Information Administration said weekly US crude inventories rose 1.1m barrels last week to 523.6m barrels, "historically high levels for this time of year". Analysts polled by S&P Global Platts had expected a 1.75m-barrel fall.

Earlier, the EIA raised its outlook for US crude production this year and next. It now expects output to average 8.73m barrels a day this year and 8.31m barrels a day next year, up from its previous forecast of 8.61m per day and 8.2m a day, respectively.

The latest US crude inventory report from the API also showed an unexpected build in stockpiles for the third successive week.

Adding to worries about the market, OPEC predicted that price pressures may persist as global demand slows seasonally and fuel inventories remain plentiful.

Brent crude dropped 0.62% to $44.70 per barrel and West Texas Intermediate slid 0.84% to $42.41 per barrel at 1625 BST.

On the company front, Prudential shares gained after the company reported an increase in first half operating profit that beat analysts’ estimates, supported by growth in its Asia business.

Rolls-Royce got a boost as Morgan Stanley upgraded the stock to ‘equalweight’ from ‘underweight’ due to increased confidence on cash, and lifted the price target to 780p from 655p.

Pharmaceutical stocks were under the cosh following a couple of ratings downgrades in the sector.

Charles Stanley downgraded Hikma Pharmaceuticals to ‘buy’ from ‘strong buy’ saying the company’s new guidance suggests a profit downgrade of around 6% for full-year 2016.

Smith & Nephew slumped after Barclays cut the stock to 'equalweight' from 'overweight' because of recent disappointing results, risks from competitors and likely delays to earnings-enhancing initiatives.

Security firm G4S surged after it posted a 44% increase in first half earnings and said it has made substantial progress with the ongoing transformation of the group.

Shares in Peppa Pig owner Entertainment One were sharply higher after the company said it has rejected a takeover offer by broadcaster ITV that valued it at 236p per share.

Regus slumped as Numis downgraded its stance on the stock to ‘hold’ from ‘buy’ following the company’s first-half results, saying the shares are up with events.

NCC Group was on the back foot after saying its chief financial officer Atul Patel has resigned from the board with immediate effect and will leave the group in February next year, possibly before his successor is appointed.

Market Movers

FTSE 100 (UKX) 6,866.42 0.22%
FTSE 250 (MCX) 17,699.68 0.07%
techMARK (TASX) 3,512.12 -0.24%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 797.50p 4.45%
Legal & General Group (LGEN) 212.50p 3.16%
Prudential (PRU) 1,423.00p 2.23%
Barclays (BARC) 163.70p 1.55%
Smiths Group (SMIN) 1,341.00p 1.44%
Royal Bank of Scotland Group (RBS) 194.90p 1.35%
St James's Place (STJ) 965.00p 1.31%
British American Tobacco (BATS) 4,858.50p 1.22%
Old Mutual (OML) 225.50p 1.21%
ITV (ITV) 201.10p 1.21%

FTSE 100 - Fallers

Berkeley Group Holdings (The) (BKG) 2,613.00p -1.40%
Hikma Pharmaceuticals (HIK) 2,268.00p -1.39%
Smith & Nephew (SN.) 1,262.00p -1.25%
Sky (SKY) 887.50p -1.17%
BHP Billiton (BLT) 1,037.50p -1.14%
3i Group (III) 625.00p -1.11%
Standard Chartered (STAN) 660.90p -1.09%
International Consolidated Airlines Group SA (CDI) (IAG) 403.30p -0.96%
Rio Tinto (RIO) 2,501.00p -0.95%
Hargreaves Lansdown (HL.) 1,337.00p -0.74%

FTSE 250 - Risers

G4S (GFS) 227.20p 16.16%
Entertainment One Limited (ETO) 240.00p 10.34%
IP Group (IPO) 175.20p 8.48%
Paysafe Group (PAYS) 415.20p 6.16%
OneSavings Bank (OSB) 227.40p 5.52%
Aldermore Group (ALD) 154.60p 5.24%
Keller Group (KLR) 899.00p 4.29%
SIG (SHI) 104.70p 4.08%
Galliford Try (GFRD) 1,027.00p 3.95%
Sophos Group (SOPH) 235.10p 3.89%

FTSE 250 - Fallers

Regus (RGU) 300.10p -6.51%
JRP Group (JRP) 93.70p -5.31%
NCC Group (NCC) 331.10p -3.97%
Go-Ahead Group (GOG) 1,837.00p -3.77%
Amec Foster Wheeler (AMFW) 502.50p -3.55%
CLS Holdings (CLI) 1,356.00p -2.87%
HICL Infrastructure Company Ltd (HICL) 176.80p -2.86%
Aggreko (AGK) 1,084.00p -2.43%
Thomas Cook Group (TCG) 60.25p -2.35%
Debenhams (DEB) 57.10p -2.23%