By Steve Goldstein
U.K. stocks closed virtually unchanged on Thursday, with a rate
cut from Bank of England not enough to erase concerns over a
struggling economy.
The Bank of England cut interest rates by a half point to 1%,
its lowest rate ever, in line with market expectations.
The rate cut came on the same day that Halifax reported a
surprise monthly rise in home prices, with prices up for the first
time in 11 months.
The Bank of England noted that past rate cuts should have a
positive impact.
But some said the U.K. central bank is running low on bullets
and should focus on buying up bad bank assets.
"With another hefty 50 basis point rate cut, the Bank of England
is fast running out of room to maneuver interest-rate wise," said
Ryan Kneale, market analyst at BetsforTraders.
Property issues came under particular pressure, with Land
Securities , British Land and Hammerson losing between 3% and
5%.
Banks were mixed. The Royal Bank of Scotland , which said it's
no longer trying to sell its insurance arm, rose 5.8%.
But HSBC Holdings (HBC) slipped 0.9%. Peers Deutsche Bank and
Santander posted downbeat results for the fourth quarter.
The FTSE 100 index , which was lower right after the rate
decision, finished flat at 4,228.93.
U.S. stocks edged higher on Thursday.
Back in London, Unilever (UL)(UN) shares lost 5.9% after the
maker of Dove soap scrapped its financial targets for 2010 and
opted not to give any for 2009.
Unilever, alongside a 58% profit rise in the fourth quarter,
said volumes dropped 1.6%.
"The sharp reduction in fourth-quarter volumes is worrying but
we believe that this trend has been exacerbated by the peak in
price increases, which should ease through 2009," said analysts
from Numis Securities.
BG Group climbed 10.2% after it said its fourth-quarter net
profit rose 56% to 756 million pounds ($1.09 billion). It also
announced a 20% increase in its full-year dividend to 11.23 pence a
share.
The natural-gas explorer and producer sees profit in its
liquefied natural-gas unit, before interest and tax, at between 1.4
billion pounds to 1.5 billion pounds in 2009. BG had previously
said LNG profits this year would be 1.3 billion pounds. The LNG
unit earned 1.59 billion pounds in 2008.
Further, it said costs to extract from the Tupi field in Brazil
will be $3.7 billion, with first production expected in late
2010.
That statement is "supporting the view that the project will be
economic in the prevailing macro environment," the Credit Suisse
analysts said.
BSkyB shares dropped 2.4%. The satellite broadcaster was
downgraded to neutral from buy at UBS, with the broker saying
regulation and the next step of a pay-television market review
could be negative for sentiment.
News Corp. holds 39% of BSkyB and is the owner of MarketWatch,
the publisher of this report.
Outside the FTSE 100, Petro Hambro Mining skidded 15.4% after
saying it's in talks on a deal to swap its stock for those of iron
ore producer Aricom and announcing a placing of 55 million pounds
of its shares.
Aricom shares jumped 8.3%.