LONDON MARKETS: FTSE 100 Adrift Ahead Of Bank Of England's 'Super Thursday' Update

By Carla Mozee, MarketWatch Features Dow Jones Newswires

BT shares fall as telecom says it will cut thousands of jobs

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U.K. stocks failed to find firm direction Thursday as investors waited for the Bank of England's update on inflation and interest rates, while BT Group PLC's business outlook dragged on the telecom's shares.

The FTSE 100 index was down less than 1 point at 7,385.23, on what should be a packed day for investors. Utility and consumer-services shares were the biggest decliners, but gains for commodity stocks were mostly offsetting those losses.

At midday local time, the BOE is scheduled to release its "Super Thursday" trio of updates: its interest rate decision, the minutes from its May policy meeting and its quarterly inflation report. The reports will be followed by a press conference with Governor Mark Carney.

"Cut growth forecasts and raised inflation guidance is likely what's on the cards, something that would put further pressure on Carney and Co. to tighten monetary policy, and therefore could end up benefiting the pound," said Connor Campbell, financial analyst at Spreadex, in a note.

Campbell noted that stocks and sterling were getting off to a slow start ahead of the central bank's update and industrial activity data. The pound was buying $1.2937, little changed from $1.2939 late Wednesday in New York.

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BT dividend gloom: BT (BT.A.LN) (BT.A.LN) fell 0.9%, after the telecommunications company said it will cut 4,000 jobs as part of a restructuring exercise and not pay its chief executive a bonus, as it reported a fall in fourth-quarter pretax profit (http://www.marketwatch.com/story/bt-cuts-4000-jobs-ceo-bonus-as-profit-falls-2017-05-11).

While BT lifted its proposed final dividend by 10%, it was downbeat on the outlook.

The "dividend policy remains progressive. but 2017/18 dividend growth [is] to be lower than the 10% previously anticipated," the telecom services company said in its fourth-quarter report.

Stock movers: Hikma Pharmaceuticals PLC shares (HIK.LN) fell 1.6% ahead of expected decision by the U.S. Food and Drug Administration on whether it can make a generic version of GlaxoSmithKline PLC's (GSK.LN) Advair asthma medication.

A number of shares were trading without divided rights Thursday, or ex-divided. Among them, British Gas parent Centrica PLC (CNA.LN) was down 1.8%, miner Glencore PLC (GLEN.LN) was up 1.2% and Glaxo was up 0.9%. Grocer and Argos parent J Sainsbury PLC (SBRY.LN) fell 0.3%.

BOE preview: Investors may also see a hawkish tone emerge from the BOE, given inflation is running above its 2% target, the labor market is tight and there have been some "robust" data, said Morgan Stanley economists, led by Jacob Nell, in a research note this week.

"After [policy maker Kristin] Forbes voted for a hike in March, and [Michael] Saunders signaled he would follow suit, we now see two votes for a hike," said Morgan Stanley economists, led by Jacob Nell, in a note this week.

But with weaker economic growth, a decline in wage and services inflation and Britain's snap general election set for June 8, the Monetary Policy Committee will likely hold the rate at 0.25%, they said. Economic growth slowed sharply during the first quarter, to a 0.3% rate (http://www.marketwatch.com/story/uk-economy-slows-sharply-ahead-of-election-2017-04-28).

There will be eight MPC members voting instead of the usual nine, as Charlotte Hogg resigned in March. (http://www.marketwatch.com/story/boe-deputy-governor-steps-down-after-failing-to-declare-barclays-link-2017-03-14)

(http://www.marketwatch.com/story/boe-deputy-governor-steps-down-after-failing-to-declare-barclays-link-2017-03-14)The BOE reports are due at 12 p.m. London time, or 7 a.m. Eastern Time, followed by Carney's appearance at 12:30 p.m.

Before that, readings on U.K. industrial and construction output in March are due at 9.30 a.m., with a report on Britain's trade balance for March scheduled for the same time.

(END) Dow Jones Newswires

May 11, 2017 04:24 ET (08:24 GMT)