London open: Stocks decline ahead of BoE's interest rate decision

London stocks started on the back foot on Thursday ahead of the Bank of England’s decision on interest rates.

The BoE is expected to keep interest rates unchanged at 0.5% and the asset purchase programme at £375bn amid a slowdown in emerging economies, low inflation and a strong pound. Ian McCafferty is projected to remain the only member of the Monetary Policy Committee to vote in favour of a rate hike.

The minutes of the BoE's meeting will be published alongside the policy announcement, both due at 1200 GMT, and may provide clues on the timing of an interest rate hike. Many economists see the BoE holding fire until well into the New Year.

HSBC analysts said potential hawks within the BoE will probably wait to see another month of economic data and the reaction to the Federal Reserve’s decision on policy next week before backing a rate increase. The Fed is widely expected to raise rates this month.

Craig Erlam, senior market analyst at Oanda, said: “It was only last month that Governor Mark Carney shelved plans to consider raising rates at the turn of the year and instead suggested that the tightening cycle may now begin towards the end of 2016.

“While I believe the UK economy is in a position to withstand a rate hike and recent unemployment and wage data possibly even warrant it, I can understand why the central bank may be reluctant given the number of possible risks to the economy next year.”

The UK will also see the release of trade balance data at 0930 GMT while the US economic calendar includes weekly jobless claims figures.

In the Eurozone, European Central Bank officials Erkki Liikanen and Benoit Coeure speak at separate events, potentially shedding light on the Governing Council’s latest policy decision.

Among corporate stocks, Sports Direct plunged after reporting flat revenue in the first half against tough comparators in the same period last year, which was boosted by the World Cup.

Whitbread declined after third quarter sales at its coffee chain Costa missed expectations.

Ocado was sitting lower after reporting a slowdown in its group sales for the 16 weeks to 29 November, citing a “challenging and competitive” grocery retail environment.

John Wood Group jumped after saying it expects to hit all of its targets for the full-year 2015, including a double-digit increase to its dividend.

Centrica rallied after saying full year earnings would in-line with forecasts in a pre-close statement at the end of what the British Gas owner admitted was a difficult year.

TUI Group was flying high after posting sizeable growth in its annual report despite a turbulent year for the industry.

Market Movers

FTSE 100 (UKX) 6,099.69 -0.44%
FTSE 250 (MCX) 17,086.38 -0.31%
techMARK (TASX) 3,168.04 -0.04%

FTSE 100 - Risers

Glencore (GLEN) 90.26p 8.64%
TUI AG Reg Shs (DI) (TUI) 1,177.00p 5.00%
Centrica (CNA) 213.10p 3.40%
Anglo American (AAL) 328.30p 2.69%
Rio Tinto (RIO) 2,001.00p 1.75%
Antofagasta (ANTO) 454.10p 1.68%
easyJet (EZJ) 1,707.00p 1.31%
InterContinental Hotels Group (IHG) 2,521.00p 1.29%
Fresnillo (FRES) 671.00p 1.28%
Randgold Resources Ltd. (RRS) 4,163.00p 0.51%

FTSE 100 - Fallers

Sports Direct International (SPD) 623.00p -6.39%
Old Mutual (OML) 184.50p -5.58%
Smiths Group (SMIN) 960.50p -2.64%
3i Group (III) 475.50p -2.40%
Whitbread (WTB) 4,374.00p -2.34%
Intertek Group (ITRK) 2,700.00p -2.24%
Associated British Foods (ABF) 3,440.00p -2.11%
St James's Place (STJ) 962.50p -2.09%
British American Tobacco (BATS) 3,675.00p -1.69%
Prudential (PRU) 1,493.00p -1.65%

FTSE 250 - Risers

Micro Focus International (MCRO) 1,435.00p 7.81%
Petra Diamonds Ltd.(DI) (PDL) 68.25p 6.56%
Marshalls (MSLH) 341.10p 4.15%
Wood Group (John) (WG.) 574.00p 3.89%
Kaz Minerals (KAZ) 99.10p 3.01%
Capital & Counties Properties (CAPC) 441.00p 2.87%
Rank Group (RNK) 286.00p 2.55%
Go-Ahead Group (GOG) 2,625.00p 2.46%
Drax Group (DRX) 229.30p 2.27%
Vedanta Resources (VED) 326.70p 2.09%

FTSE 250 - Fallers

Investec (INVP) 492.30p -6.85%
Ocado Group (OCDO) 345.10p -3.93%
Big Yellow Group (BYG) 769.00p -3.03%
Acacia Mining (ACA) 183.20p -2.81%
Allied Minds (ALM) 452.00p -2.80%
PZ Cussons (PZC) 297.50p -2.71%
CLS Holdings (CLI) 1,801.00p -2.54%
Brown (N.) Group (BWNG) 335.70p -2.41%
Polymetal International (POLY) 515.00p -2.28%
Provident Financial (PFG) 3,423.00p -2.12%