Europe close: Gains in stocks continue

Investors were caught by surprise on Thursday as the Bank of England decided to leave interest rates unchanged despite concerns about the potential fallout from Brexit.

Nevertheless, the main European indices closed near their best levels of the day, with analysts referencing the ongoing flattening of interest rate curves around the world as the main reason behind ongoing gains in equity markets.

The benchmark Stoxx 600 finished the session up by 0.80% or 2.67 points at 338.50, while Italy's FTSE Mibtel paced gains with a rise of 1.63% or 269.63 points to see the session out from 16,797.52 and the Cac-40 tacked on another 1.16% to 4,385.52.

London’s FTSE 100 on the other hand was left out from the latest round of gains, turning negative after the BoE announced that it was keeping interest rates on hold at 0.50%.

Analysts had been expecting the bank to cut rates for the first time since 2009, by 25 basis points. The pound got a boost, however, trading up 1.7% against the dollar.

The BoE voted 8-1 to keep rates unchanged.

Naeem Aslam, chief market analyst at Think Markets, said: “The Bank of England is not that dovish and bears have been caught badly on the wrong side of the market. Mark Carney was expected to cut the rate today as probabilities were skewed in favour of a rate cut. All bets are for August now as they want to see more data out of the UK and asses the global position.

“Basically they have saved their bullets as they have very limited number of them and want to wait for the right opportunity. The governor needs to meet new Chancellor and wants to get a better understanding of the economy and surely wants to be on the same page before they start firing.”

To take note of, new UK Prime Minister Theresa May appointed former London Mayor Boris Johnson as foreign secretary, with Philip Hammond the new Chancellor and Amber Rudd Home Secretary.

In corporate news, information services firm Experian was in the black after it said revenue grew 5% at constant exchange rates in the first quarter.

Recruitment firm Hays surged after saying it expects full-year operating profits to be ahead of current market estimates at around £180m.

Food retailers Delhaize and Ahold were trading higher after agreeing to sell 86 US stores as they look to win approval from the US Federal Trade commission for their merger.

Oil prices advanced on a weaker dollar and following Wednesday’s drop. West Texas Intermediate was up 1.71% to $45.53 a barrel and Brent crude was 1.9% firmer at $47.15.