UKX FTSE 100 Index

By Carla Mozee and Victor Reklaitis, MarketWatch

BOE policy maker says more monetary stimulus may be needed

U.K. stocks ended modestly higher Tuesday, but BP PLC shares dropped following the major oil company's financial results.

Meanwhile, BT Group PLC logged its best gain in nearly a month after comments about its business from the country's telecom regulator.

The FTSE 100 rose 0.2% to 6,724.03, with gains coming from miners and industrial shares, while oil and gas and consumer services shares sagged. The index on Monday ended lower by 0.3%. (http://www.marketwatch.com/story/ftse-100-clings-to-thin-gain-as-banks-drift-lower-2016-07-25)

Investors had plenty of corporate updates to assess Tuesday. Among them, SABMiller (SAB.JO) received an increased takeover bid from Anheuser-Busch InBev NV (http://www.marketwatch.com/story/ab-inbev-increases-offer-for-sabmiller-2016-07-26-3485537)(ABI.BT)(ABI.BT), to GBP45 a share ($58.85) from GBP44 a share. The shares lost grip of earlier gains and ended lower by 0.7% at GBP44.10.

InBev's new offer, which values SABMiller at about GBP79 billion ($104 billion), comes as the British pound has slid in the wake of the June 23 Brexit vote that will lead the U.K. out of the European Union.

A preliminary estimate of second-quarter U.K. gross domestic product, due Wednesday, will "indicate whether we are entering the implementation of a Brexit from a position of strength, or as seems more likely, a position of weakness," wrote Laith Khalaf, senior analyst at Hargreaves Lansdown, in an note.

The data will arrive ahead of the Bank of England's policy decision and quarterly inflation report on Aug. 4. "The markets...are currently pricing in a 95% chance of a rate cut, though don't forget they got it badly wrong last time around," he wrote. "Predicting the voting intentions of nine people is a roll of the dice at the best of times, but it's even more unpredictable so close to the referendum."

In terms of fiscal policy, "[i]f we get a nasty surprise tomorrow, this could help put a nail in the coffin of austerity," Khalaf added. "However it currently looks like we are going to have to wait until the Autumn statement, probably in November, before we get a full picture of the government's plans for spending and expenditure."

Analysts polled by FactSet expect second-quarter growth of 0.4% and year-over-year growth of 1.9%.

Movers: BP PLC shares (BP.LN) (BP.LN) fell 1.3% after the major oil-and-gas company posted quarterly underlying earnings of $720 million (http://www.marketwatch.com/story/bp-posts-replacement-cost-of-225-billion-2016-07-26), falling short of analysts' consensus of $839 million.

BP's second-quarter replacement cost loss--analogous to the net income that U.S. oil companies report--was $2.25 billion as it booked a multibillion-dollar charge relating to its 2010 Gulf of Mexico rig blowout and oil spill.

Shares of rival oil major Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) were up 0.9%. Shell's financial results are due on Thursday.

Oil prices (http://www.marketwatch.com/story/oil-futures-fall-again-after-settling-at-3-month-low-2016-07-26) remained under pressure Tuesday, driving down toward their lowest settlements since April.

But BT Group PLC (BT.A.LN) popped up 3.2%. Their best session since June 26 came as Ofcom, the U.K.'s telecommunications regulator, called for BT's Openreach network business to have its own structure, but stopped short of calling for a full separation of the businesses (http://www.marketwatch.com/story/bt-arm-should-have-separate-structure-regulator-2016-07-26). BT later rejected Ofcom's determination (http://www.marketwatch.com/story/bt-rejects-call-for-separation-of-openreach-unit-2016-07-26).

Provident Financial PLC (PFG.LN) shares topped the FTSE 100 by rising 5.7% after the credit issuer raised its dividend (http://www.marketwatch.com/story/provident-financial-pretax-profit-climbs-49-2016-07-26), posted a 49% surge in first-half pretax profit and forecast good quality growth for the full year.

(http://www.marketwatch.com/story/bt-arm-should-have-separate-structure-regulator-2016-07-26)Sterling: The pound bought $1.3185 in late European trade, recovering from an intraday low of $1.3058. The pound had been hit after Bank of England policy maker Martin Weale, in a Financial Times interview published Tuesday (http://www.ft.com/cms/s/0/03c877ce-5272-11e6-9664-e0bdc13c3bef.html#axzz4FV4zBQoH), indicated he's now supportive of further stimulus measures by the central bank to aid the British economy in the wake of the Brexit vote. The pound late Monday traded at $1.3140.

Weale's view was formed in part after Markit's PMI report, released Friday, showed contraction in the manufacturing and services sectors (http://www.marketwatch.com/story/uk-economy-in-dramatic-downturn-after-brexit-vote-data-show-2016-07-22) in July.

(END) Dow Jones Newswires

July 26, 2016 12:20 ET (16:20 GMT)

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