UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Pound climbs as dissent over rate view at Bank of England emerges

U.K. stocks charged up to record levels Thursday, with mining shares invigorated by a pullback in the dollar and a major investment in Anglo American PLC, while the pound surged on a hawkish development on interest rates at the Bank of England.

The FTSE 100 climbed 0.6% to 7,412,56, on track to surpass its record closing high of 7,382.90 logged on March 1. The index on Wednesday finished up by 0.2%.

The index logged a record intraday high of 7,444.62 Thursday as all sectors gained, led by the basic materials and oil and gas groups. Those sectors make up a more than 20% weighting on the British benchmark, according to FactSet data.

Anglo American PLC (AAL.LN) topped the gauge as its shares jumped 7.9%. They surged 10% at the open after billionaire Anil Agarwal's family trust, Volcan Investments Ltd., bought a 12% stake (http://www.marketwatch.com/story/indias-agarwal-takes-12-stake-in-anglo-american-2017-03-16) in the producer of iron ore, copper and other metals. The purchase makes Volcan the second-biggest investor in Anglo American.

BOE rate call: The FTSE 100 slightly pared gains as the pound jumped above $1.23 for the first time since early March. That surge came after the Bank of England voted to hold the benchmark rate at 0.25% by 8-1 (http://www.marketwatch.com/story/bank-of-england-votes-8-1-to-hold-key-rate-at-025-2017-03-16), with board member Kristen Forbes favoring a rate hike. U.K. inflation looks set to rise above 2% in the "next few months," the bank said.

"Even with inflation expected to breach the central bank's 2% target this year and unemployment at its lowest since the 1970s, the bank is keen to keep rates low ahead of Article 50 and two years of uncertain Brexit negotiations," said Tom Stevenson, investment director for personal investing at Fidelity International, in a note.

"The danger this presents is the bank getting behind the curve as price pressures increase. When it comes to inflation, you can't put the toothpaste back in the tube," he wrote.

The pound climbed to $1.2351 from $1.2291 late Wednesday in New York. Pound weakness since the Brexit referendum last June has helped push shares of London-listed multinational companies higher on the prospect sterling's lower value will boost their earnings and sales made overseas.

The yield on the 10-year gilt rose further after the BOE statement, up 4 basis points to 1.25% as prices fell.

The policy decision is set to be the last before U.K. Prime Minister Theresa May triggers Article 50 (http://www.marketwatch.com/story/uks-brexit-bill-approved-by-the-queen-reports-2017-03-16), the bill that paves the way for the start of the Brexit process.

Miners: Shares of other metals producers pushed higher alongside Anglo American as the sector was also aided by a pullback in the dollar . The dollar late Wednesday fell roughly 1% after U.S. Federal Reserve Chairwoman Janet Yellen signaled the central bank will remain on a gradual pace of raising interest rates (http://www.marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15).

Read:Why the Fed interest-rate hike fueled a rally in gold (http://www.marketwatch.com/story/why-the-fed-interest-rate-hike-fueled-a-rally-in-gold-2017-03-15)

Gold futures shot up 2.5% to trade above $1,230 an ounce.

Among miners, shares of Randgold Resources PLC (RRS.LN) popped up 5%, Fresnillo PLC (FRES.LN) soared 5.5%, and Antofagasta PLC (ANTO.LN) tacked on 4.6%.

Also in the resources sector, BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) leapt 4.5%, Glencore PLC (GLEN.LN) rose 4.7%, and Rio Tinto PLC (RIO) (RIO) (RIO) picked up 4.1%.

Other movers: J Sainsbury PLC (SBRY.LN) shares shed 1.6% as the company said supermarket sales fell 0.1% (http://www.marketwatch.com/story/sainsburys-supermarket-sales-dip-2017-03-16) in the nine weeks to March 11.

(END) Dow Jones Newswires

March 16, 2017 08:55 ET (12:55 GMT)

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