London close: Stocks fall as BoE warns on Brexit

The BoE Monetary Policy Committee voted unanimously to leave bank rates unchanged at 0.50% and its asset purchase target at £375bn, as widely expected.

On its assumption that the UK will vote to remain in the EU on 23 June, which increasingly appears to be less secure given recent poll results, the MPC's core view is that the next move for interest rates will be upward.

Ahead of the referendum, the MPC minutes noted an ever wider range of financial assets were being jostled by worries about a potential Leave vote and that increased uncertainty has led to increased delays in major corporate decisions regarding business investment, commercial real estate transactions and M&A activity.

"On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply," read a statement summing up the minutes of the MPC's meeting.

"This would be consistent with changes to the fundamentals underpinning the exchange rate, including worsening terms of trade, lower productivity, and higher risk premia."

Earlier, the Federal Reserve and the Bank of Japan also decided to stand pat on policy measures.

The Fed on late Wednesday left interest rates unchanged at 0.25% to 0.50%, as expected, while Chair Janet Yellen struck a fairly dovish note and conceded the upcoming UK referendum was a factor in the decision.

The Bank of Japan on Thursday maintained interest rates at negative 0.1% and decided against additional stimulus.

In economic data, UK retail sales volumes increased 6% in May compared to the same month a year ago, well ahead of forecasts for a 3.8% increase, the Office for National Statistics said. Retail sales growth was driven by clothing sales, which rebounded from weakness in April during colder than normal weather.

“Even though there is plenty of uncertainty ahead of next week’s EU referendum, consumers have still been spending on the high street which is what the government needs,” said Dennis de Jong, managing director of UFX.com.

The eurozone remained in deflation in May, according to Eurostat. The consumer price index fell 0.1% in May, as expected, up from a 0.2% decline in April.

US inflation rose an annualised 1.0% in May, down from the previous month’s 1.1% and missing estimates for unchanged growth. On the month the consumer price index increased 0.2% in May, slowing from the prior month’s 0.4% increase. Economists had expected a 0.3% month-on-month gain. The slowdown in inflation was driven by a decline in food prices.

“Overall, the Fed’s forecasts that inflation will accelerate by only 0.1% points per year are hard to square with the evidence here of a clear acceleration in core services inflation, which will soon be compounded by a fading of the drag on goods prices from the stronger dollar,” said Paul Ashworth, chief US economist at Capital Economics.

The number of Americans filing for unemployment benefits rose more than expected last week, according to the Labor Department. US initial jobless claims were up by 13,000 to 277,000, missing expectations of a slightly smaller increase to 270,000.

Sentiment among US housebuilders improved a touch in June. The National Association of Home Builders/Wells Fargo housing market index nudged up two points to 60. This was slightly above the reading of 59 expected by economists and marked the highest reading since January.

Meanwhile, oil prices continued to fall on a stronger dollar with Brent crude down 3.3% to $47.36 per barrel and West Texas Intermediate down 4.5% to $46.38 per barrel at 1204 BST.

In company news, miners gained as metal prices rose with Randgold, Fresnillo and Glencore all up.

WS Atkins advanced after it reported a 6% rise in revenue in its final results on Thursday, to £1.86bn.

N Brown rallied after the clothing retailer said it was confident of hitting full year targets.

Restaurant Group and Indivior declined as the stocks went ex-dividend on Thursday.

Market Movers

FTSE 100 (UKX) 5,962.04 -0.08%
FTSE 250 (MCX) 16,080.06 -1.34%
techMARK (TASX) 2,955.99 -0.54%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 6,925.00p 4.77%
Fresnillo (FRES) 1,234.00p 1.82%
BP (BP.) 364.85p 1.49%
Glencore (GLEN) 138.45p 1.43%
British American Tobacco (BATS) 4,152.00p 1.27%
Diageo (DGE) 1,786.00p 0.96%
Tesco (TSCO) 152.65p 0.96%
Royal Dutch Shell 'B' (RDSB) 1,738.00p 0.93%
Burberry Group (BRBY) 1,071.00p 0.85%
Coca-Cola HBC AG (CDI) (CCH) 1,384.00p 0.80%

FTSE 100 - Fallers

Ashtead Group (AHT) 962.50p -3.56%
Mediclinic International (MDC) 856.50p -3.27%
Anglo American (AAL) 612.40p -2.95%
Severn Trent (SVT) 2,128.00p -2.88%
Lloyds Banking Group (LLOY) 61.34p -2.63%
3i Group (III) 509.00p -2.58%
London Stock Exchange Group (LSE) 2,392.00p -2.45%
Antofagasta (ANTO) 409.70p -2.38%
Paddy Power Betfair (PPB) 8,685.00p -1.98%
Persimmon (PSN) 1,868.00p -1.89%

FTSE 250 - Risers

Brown (N.) Group (BWNG) 227.90p 6.30%
Atkins (WS) (ATK) 1,268.00p 5.40%
Centamin (DI) (CEY) 115.60p 4.90%
Safestore Holdings (SAFE) 350.00p 2.25%
Euromoney Institutional Investor (ERM) 971.00p 2.21%
Cobham (COB) 139.20p 1.90%
Henderson Group (HGG) 241.00p 1.64%
Ashmore Group (ASHM) 275.10p 1.63%
Acacia Mining (ACA) 347.00p 1.55%
B&M European Value Retail S.A. (DI) (BME) 272.80p 1.41%

FTSE 250 - Fallers

Restaurant Group (RTN) 314.60p -7.98%
Aldermore Group (ALD) 174.10p -7.74%
William Hill (WMH) 272.40p -7.13%
Workspace Group (WKP) 750.50p -6.48%
Evraz (EVR) 117.00p -6.47%
FirstGroup (FGP) 95.05p -6.45%
Kaz Minerals (KAZ) 130.60p -5.91%
Indivior (INDV) 215.20p -5.36%
Intermediate Capital Group (ICP) 561.00p -5.24%
Tullow Oil (TLW) 230.60p -5.10%