BT cutting thousands of jobs; British industrial production shrinks
Continue Reading Below
U.K. stocks were steady Thursday, as the pound fell after the Bank of England cut its economic growth outlook.
The FTSE 100 index edged up 0.1% to 7,392.05, but has searched for firm direction throughout the session on what's been a packed day for investors. Utility and consumer-related shares drove lower, while commodity and financial stocks were higher.
The pound dropped in midday trade after the Bank of England reduced its in 2017 growth outlook for U.K. gross domestic product to 1.9%, from 2%. A lower pound can aid shares of blue-chip multinational companies that make most of their profit and sales overseas.
Sterling fell to $1.2884, down from $1.2925 just ahead of the BOE release. The pound bought $1.2939 late Wednesday in New York.
The British central bank met widely held expectations in holding its key interest rate at 0.25% (http://www.marketwatch.com/story/bank-of-england-votes-7-1-to-hold-key-rate-at-025-2017-05-11). The vote was 7-1, with board member Kristin Forbes preferring a rate hike. Eight members participated instead of the usual nine, after Charlotte Hogg resigned in March. (http://www.marketwatch.com/story/boe-deputy-governor-steps-down-after-failing-to-declare-barclays-link-2017-03-14)
Continue Reading Below
Bank of England Governor Mark Carney is holding a press conference at 12:30 London time, or 7:30 a.m. Eastern Time.
BT dividend gloom: Shares of BT (BT.A.LN) (BT.A.LN) stumbled 3%, 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 drop in quarterly 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 6%. The move came ahead of expected decision by the U.S. Food and Drug Administration on whether the company can make a generic version of GlaxoSmithKline PLC's (GSK.LN) Advair asthma medication.
A number of shares were trading ex-dividend, or without divided rights, on Thursday. British Gas parent Centrica PLC (CNA.LN) was down 2.3%, 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 1.3%, and Glaxo was up 0.9%. Grocer and Argos parent J Sainsbury PLC (SBRY.LN) fell 1%.
Data: 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.
(END) Dow Jones Newswires
May 11, 2017 07:39 ET (11:39 GMT)