London midday: Stocks snap higher as BoE cuts interest rates, boosts QE

London stocks jumped on Thursday as the Bank of England cut interest rates and increased the size of its asset purchase programme.

Just after the decision the Footsie was up by 1.33% or 88.21 points to 6,722.61.

The BoE's Monetary Policy Committee voted unanimously to lower interest rates by 25 basis points to 0.25%, as expected by economists. Rate-setters voted 6-3 to boost the size of the asset purchase programme by £60bn.

They also decided to launch a new Term Funding Scheme to reinforce the pass-through of the cut in Bank Rate and to purchase of up to £10bn of UK corporate bonds.

Thursday´s actions follow a weak set of recent economic data in the wake of the UK’s vote to leave the European Union.

"If the incoming data prove broadly consistent with the August Inflation Report forecast, a majority of members expect to support a further cut in Bank Rate to its effective lower bound at one of the MPC’s forthcoming meetings during the course of the year. The MPC currently judges this bound to be close to, but a little above, zero," policy-makers said in the Inflation Report.

“Today’s historic decision to cut interest rates for the first time in more than seven years is no major shock, but it does indicate growing concern over the state of Britain’s post-Brexit economy,” said Dennis de Jong, managing director at UFX.com.

“Last month Mark Carney’s rate-setters surprised many by holding their nerve when voting against a reduction, but a raft of underwhelming economic data has finally forced their hand.”

Governor Mark Carney will speak at 1230 BST to deliver to the August Quarterly Inflation Report.

The pound plunged 0.41% against the dollar to $1.3270.

Elsewhere, US data will be released in afternoon trade including initial jobless claims at 1330 BST and factory orders at 1500 BST.

In corporate news, insurance giant 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.

Inmarsat gained as the satellite services group returned to growth in the second quarter thanks to growth from the aviation sector, government contracts and its deal to supply mobile network Ligado Networks.

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.

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) 6,643.67 0.14%
FTSE 250 (MCX) 17,071.72 0.44%
techMARK (TASX) 3,431.90 -0.25%

FTSE 100 - Risers

Aviva (AV.) 404.60p 5.09%
Standard Chartered (STAN) 631.60p 2.82%
Royal Dutch Shell 'B' (RDSB) 1,958.50p 2.81%
Kingfisher (KGF) 346.50p 2.55%
Prudential (PRU) 1,340.50p 2.41%
Royal Dutch Shell 'A' (RDSA) 1,879.00p 2.31%
Dixons Carphone (DC.) 344.40p 1.86%
RSA Insurance Group (RSA) 506.50p 1.67%
Royal Bank of Scotland Group (RBS) 193.70p 1.63%
Old Mutual (OML) 211.20p 1.54%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 2,305.00p -13.61%
Randgold Resources Ltd. (RRS) 8,050.00p -10.36%
Fresnillo (FRES) 1,876.00p -3.35%
Next (NXT) 5,250.00p -1.69%
BAE Systems (BA.) 516.00p -1.34%
Severn Trent (SVT) 2,363.00p -1.34%
SABMiller (SAB) 4,351.00p -1.24%
Relx plc (REL) 1,390.00p -1.14%
Rolls-Royce Holdings (RR.) 742.50p -1.13%
GKN (GKN) 292.30p -1.12%

FTSE 250 - Risers

Serco Group (SRP) 135.40p 14.07%
AA (AA.) 255.70p 5.66%
Inmarsat (ISAT) 821.00p 5.19%
Paragon Group Of Companies (PAG) 274.80p 4.41%
Pets at Home Group (PETS) 249.30p 4.35%
Hill & Smith Holdings (HILS) 1,121.00p 4.28%
Tullow Oil (TLW) 192.80p 3.94%
Ladbrokes (LAD) 143.80p 3.90%
Stagecoach Group (SGC) 205.00p 3.07%
Investec (INVP) 458.00p 3.01%

FTSE 250 - Fallers

Acacia Mining (ACA) 553.50p -4.98%
Cobham (COB) 161.90p -3.63%
Hochschild Mining (HOC) 281.10p -3.57%
Vedanta Resources (VED) 520.50p -2.71%
Centamin (DI) (CEY) 164.40p -2.66%
Indivior (INDV) 288.10p -2.44%
Halfords Group (HFD) 344.50p -2.41%
OneSavings Bank (OSB) 201.70p -2.37%
Domino's Pizza Group (DOM) 377.70p -2.23%
Sophos Group (SOPH) 223.30p -2.06%