London dips, European stocks rally British rates held

A Bank of England decision to leave rates unchanged at its first meeting since Britain voted to quit the EU left the London market unimpressed Thursday although European stocks finished higher.

All eyes were on London after the appointment of a new British finance minister and with traders waiting to see if the Bank of England would cut its main interest rate to a new record-low level under 0.50 percent.

In anticipation of a possible rate cut, London's benchmark FTSE 100 index was 1.0-percent higher in mid-morning but slid after the BOE's 8-1 decision to hold fire on rates.

At the close, the index was down 0.24 percent at 6,654.47 points, despite a hint that the bank would cut rates next month.

Eurozone markets took a more positive view as Frankfurt rallied 1.3 percent to close above 10,000 points for the first time since the seismic British referendum. The Paris market also rose by 1.1 percent.

On Wall Street, the Dow Jones Industrial Average traded up 0.7 percent at 18,513.06, the broad-based S&P 500 was flat while the tech-rich Nasdaq Composite Index rose 0.5 percent.

Strong earnings from JPMorgan Chase boosted US stocks as the Dow member jumped 2.2 percent on second quarter earnings and revenues which topped expectations.

Citigroup and Wells Fargo, which report earnings on Friday, rose 2.8 percent and 1.3 percent, respectively.

Bank executives described US growth as solid and said it was too soon to know how the British vote to leave the European Union would affect operations.

Briefing.com analyst Patrick O'Hare identified an overall "party mood" on expectations of more stimulus from central banks and in Japan.

Looking to the likelihood of an August rate cut in Britain, O'Hare said the Bank of England "did nothing to take away the stimulus punch bowl from which the market has been drowning its sorrows, raising the roof, and pretty much partying like it's 1999."

In foreign exchange, the pound extended a recovery from recent 31-year lows against the dollar, adding two cents to stand at 1.3345.

In Asia, Japan's main stocks index led a regional rally to post a fourth straight gain as investors took heart from another record close Wednesday on Wall Street.

The Nikkei index has now wiped out all the losses sustained after Britain's shock vote, while the yen sank further as traders await details on promised government economic stimulus.

Tokyo has been the stand-out performer with Prime Minister Shinzo Abe expected to unveil a new round of spending as the world's number-three economy limps along.

Elsewhere Thursday, Hong Kong shares rose 1.1 percent but Shanghai ended down 0.2 percent, a day after China unveiled data showing imports and exports both fell last month, reinforcing worries about its slowing economy.

China's yuan dropped to its lowest in nearly six years on the back of the trade data.

- Key figures around 1630 GMT -

London - FTSE 100: DOWN 0.2 percent at 6,654.47 points (close)

Frankfurt - DAX 30: UP 1.4 percent at 10,068.30 (close)

Paris - CAC 40: UP 1.1 percent at 4,385.42 (close)

EURO STOXX 50: UP 1.4 percent at 2,968.19

Tokyo - Nikkei 225: UP 1.0 percent at 16,385.89 (close)

Hong Kong - Hang Seng: UP 1.1 percent at 21,561.06 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,054.02 (close)

New York - DOW: UP 0.7 percent at 18,513.06

Dollar/yen: UP at 105.81 yen from 104.52 yen Wednesday

Pound/dollar: UP at $1.3345 from $1.3144

Euro/dollar: UP at $1.1110 from $1.1089