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

By Carla Mozee, MarketWatch Features Dow Jones Newswires

BT cutting thousands of jobs; British industrial production shrinks

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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 3 points at 7,382.92, on what should be a packed day for investors. Utility, consumer-related and industrial shares driving lower, but gains for commodity and financial 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 $1.2915, down from $1.2939 late Wednesday in New York.

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BT dividend gloom: Shares of BT (BT.A.LN) (BT.A.LN) stumbled 3.1%, on track for the biggest drop in two months. The telecommunications company lifted its proposed final dividend by 10%, but was downbeat on the outlook.

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

BT also 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).

Stock movers: Hikma Pharmaceuticals PLC shares (HIK.LN) sank 8.1% 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. British Gas parent Centrica PLC (CNA.LN) was down 2.1%, with that stock also hit with a ratings downgrade by J.P. Morgan Cazenove to underweight from overweight. Miner Glencore PLC (GLEN.LN) was up 1.4% and Glaxo was up 0.5%. Grocer and Argos parent J Sainsbury PLC (SBRY.LN) fell 0.6%.

BOE preview: Investors may 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, a reading on U.K. industrial production showed activity shrank 0.5% in March (http://www.marketwatch.com/story/uk-industrial-production-shrinks-on-warm-weather-2017-05-11). Output on a year-over-year basis rose 1.4%, according to the Office for National Statistics, but that was below market expectations of 1.9% growth. Factory output figures also fell short.

Meanwhile, the country's total trade deficit widened sharply in March, by GBP5.7 billion, as imports of machinery, transport equipment, oil and chemicals increased.

The pound fell after the data.

(END) Dow Jones Newswires

May 11, 2017 06:22 ET (10:22 GMT)