European markets close mixed; FTSE falls, sterling rises; BOE holds rates

Key Points
  • Bank of England holds interest rates steady.
  • Russia and Belarus to launch a week of strategic military exercises
  • Oil prices higher as IEA sees global demand catching up with supply

European markets finished trade relatively mixed on Thursday as investors assessed the Bank of England's latest policy decision and individual stock news.

The pan-European Stoxx 600 edged higher in later trade, to close up 0.12 percent, while sectors finished mostly higher.

Looking to bourses, the FTSE 100 sank 1.14 percent by the close, dragged down by a fall in U.K. miners and an uptick in Sterling, which rose on the Bank of England's suggestion that an interest rate hike could emerge in the "coming months."

Meanwhile, France's CAC 40 finished trade up 0.15 percent, while Germany's DAX slipped 0.10 percent. Peripheral bourses pointed in different directions by the close.

A mixed picture for UK stocks

Basic resources was the worst-performing sector on Thursday, closing down 1.44 percent as a sector, with London-listed miners sinking to the bottom of the index. U.K.'s Rio Tinto, BHP Billiton, Glencore and Anglo American all posted declines of more than 2 percent, as copper and nickel prices came under pressure.

Sticking with commodities, the oil and gas sector rose 0.85 percent by the close, buoyed by an announcement from the International Energy Agency on Wednesday, which said that global demand is catching up with supply. Brent traded at $55.80 around the European market close, while WTI broke the $50 barrier during trade, the first time in five weeks. At the close, WTI sat at $50.25 per barrel.

Switching to retail, U.K. stocks grabbed market attention on Thursday. At the top of the STOXX 600 was British retailer Next, which soared 13.06 percent after upgrading its full-year sales and profits forecast. The company now predicts full-year profits of between £687 million and £747 million, compared with its previous estimate of £680 million and £740 million.

London-listed online takeaway service Just Eat meanwhile rose 1.98 percent, after Investec raised its target price on the stock.

However, not all was pretty on the U.K. retail side. One of the STOXX 600's worst performers was supermarket WM Morrison, which fell 5.14 percent even though it reported a 40 percent rise in profits for the first half of the year. The sector, however, closed up 1.2 percent.

Elsewhere, the autos sector popped 0.77 percent, lifted by an uptick in GKN shares, which rose 3.14 percent. This comes after the engineering group announced that its CEO Nigel Stein would retire at the end of the year, with the head of aerospace to lead the firm - a division of the group that is believed to be growing faster than the rest of the market, according to Reuters.

Bank of England holds rates steady

Taking a neutral stance on Brexit is the right thing to do for BOE: Pro

The Bank of England held interest rates steady Thursday but said that a hike is likely to be needed in the "coming months."

The Monetary Policy Committee (MPC) voted by a majority of 7-2 to keep rates at a record low 0.25 percent but noted that a strengthening economy and inflationary pressures could prompt them to shift their policy stance sooner than anticipated.

The freeze in interest rates was largely anticipated by markets, however, the shift in language caused sterling to jump higher as investors sensed a more hawkish approach.

Sterling rose to $1.3317 against the dollar shortly after the announcement and 0.8923 against the euro. At the close, the British currency continued to rise, trading over 1 percent at $1.3391 against the dollar.

Elsewhere, North Korea said on Wednesday that it would redouble its efforts to fight off what it called the threat of a U.S. invasion after being hit by a new set of sanctions from the United Nations over its nuclear missile tests.

On Wall Street, equities traded mostly lower at Europe's close after strong inflation data raised the possibility of tighter monetary policy from the U.S. central bank.

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