Stock Rally Fades, Pound Falls on BOE Decision -- 2nd Update

By Justin Yang and Kenan Machado Features Dow Jones Newswires

Dow poised to stall near record high

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-- Pound lower after Bank of England leaves rates unchanged

-- European earnings mixed

A rally in global stocks stalled Thursday while the British pound came under pressure after the Bank of England said it would leave interest rates unchanged.

Futures pointed to a flat opening for the Dow Jones Industrial Average after it climbed above the 22000 mark for the first time on Wednesday. Markets across Asia declined, led lower by South Korea as index giant Samsung Electronics fell and investors anticipated higher taxes, while the Stoxx Europe 600 was flat in midday trading.

The British pound was last down 0.5% at $1.3161 from $1.3232 previously after six officials at the Bank of England voted to keep rates unchanged at a record low of 0.25%. That helped push up the export-heavy FTSE 100 index, which climbed 0.4%.

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In recent weeks, there were increasing calls from monetary policy committee members to raise rates. But with inflation easing in June and continued modest growth, a majority of members were expected to oppose an increase.

Mark Carney, BOE governor, is expected to give a press conference shortly after the announcement.

In U.S. premarket trading, shares of Tesla Inc. jumped around 6% after the electric-car company reiterated it plans to sell more vehicles during the second half of the year. Shares of American International Group Inc. also rose after it posted better-than-expected second quarter operating results.

The Dow topped 22000 on Wednesday for the first time, its 32nd record of the year, as stocks benefited from a buoyant global economy, a weaker dollar and a solid earnings season.

European stocks have struggled in recent sessions amid a climbing euro and mixed corporate results. German conglomerate Siemens AG fell 3.3% Thursday after its second results were slightly weaker than analysts expected. Italy's UniCredit SpA was one of the biggest gainers, up 4.9% after it reported a higher second-quarter profit.

In Asia, South Korean stocks led the way lower, with the Kospi down 1.7% after recently topping highs set in 2011. A big pressure point was Samsung Electronics, which fell 2.5%--erasing its gains for the week--as the Samsung conglomerate's de facto head testified for the first time at his corruption trial.

Some analysts said the prospect of higher corporate and personal income taxes under the country's new leadership has also put pressure on the index. South Korea's government is planning to raise taxes on wealthy individuals and large companies, the first increase in the country's corporate-tax rate since 1991.

Meanwhile, a decline in technology shares weighed down Asian bourses after they climbed Wednesday following Apple's strong quarterly report.

Japan's Nikkei and Hong Kong's Hang Seng fell around 0.3%, while Taiwan's Taiex declined 0.5% after hitting 27-year highs a day earlier.

Demi Guo contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

August 03, 2017 07:48 ET (11:48 GMT)