By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- U.K. stocks stayed mostly higher on
Thursday after the Bank of England left monetary policy unchanged
as expected.
The benchmark index traded 0.5% higher at 6,666.62, building on
a 0.7% advance from Wednesday and on track for the highest close in
almost a week.
The main event in London on Thursday was the Bank of England's
decision to keep the size of its bond-buying program unchanged and
hold its key lending rate at a record low of 0.5%, where it has
stood since March 2009. The central bank's Monetary Policy
Committee maintained its asset purchases, the centerpiece of its
quantitative-easing strategy, at 375 billion pounds ($629
billion).
The decision to stand pat was widely expected by economists, as
the U.K. unemployment rate is still above 7% and inflation is
running below the BOE target of 2%. Longer term, economists were
more unsure, however, as to when the central bank will introduce
its first rate hike.
Philip Shaw, chief economist at Investec Securities, said he
doesn't expect the central bank to raise rates until the third
quarter of 2015, but Rob Wood, chief U.K. economist at Berenberg,
forecast a change much sooner.
"The U.K. recovery has much more momentum that the BOE thinks,
so they will need to hike interest rates within the next 12 months,
in our view," Wood said in a note.
Equities in London held on to gains after the decision, but the
pound (GBPUSD) moved lower against other major currencies, trading
at $1.6776, down from around $1.6789 just before the BOE
decision.
Among stock movers, house builders pushed higher after another
solid reading on the U.K. housing market. The Royal Institution of
Chartered Surveyors' monthly survey showed the number of houses
sold in the U.K. rose to a six-year high in March, while the number
of houses for sale declined. Shares of Taylor Wimpey PLC gained
1.5%, while Barratt Developments PLC put on 1%.
On a more downbeat note, shares of Marks and Spencer Group PLC
lost 1.6%, erasing an earlier gain, as investors analyzed the
retailer's fourth-quarter trading statement. Sales rose 1.9% in the
quarter, but the details of the report revealed that the
general-merchandise business is struggling.
Shares of Royal Mail PLC dropped 1.9% after news on Wednesday
that Ofcom will investigate the delivery and logistics company
following a complaint from rival TNT Express NV .
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