LONDON MARKETS: FTSE 100 Turns Higher, But Pound Slides As Bank Of England Cuts Growth Outlook

Services-sector activity rises more than expected

U.K. blue-chip stocks turned higher Thursday, but the pound was knocked down in the wake of the Bank of England's decision to lower some of its forecasts for British economic growth and wages.

The FTSE 100 picked up 0.5% to 7,450.49, in broad-based gains led by health care and consumer-goods stocks. The London benchmark closed 0.1% lower on Wednesday.

Next PLC (NXT.LN) still occupied the top spot as the session's best performer. the clothing and home furnishings retailer's shares surged 8.8% after it raised the lower end of its full-year sales guidance ( after a rise in the second quarter.

Shares of Marks & Spencer Group PLC (MKS.LN) , a rival seller of apparel, moved up 1.2%.

BOE reports: In the central bank's "Super Thursday" trio of releases, it held the benchmark interest rate at 0.25% (, after a 6-2 vote of policy makers. The Monetary Policy Committee also made some changes to its economic projections, among them a cut in its 2017 growth forecast for gross domestic product to 1.7% from 1.9%.

It also now sees 2018 growth of 1.6%, compared with 1.7% previously. Wages, on average, in 2018 are expected to grow by 3%, down from the previous view of 3.5%.

Read:BOE says rates may rise faster than markets expect (

The pound slid to $1.3158 from $1.3235 before the BOE's update. Sterling late Wednesday traded at $1.3224.

Equities, however, rose on the prospect that a lower value of sterling should bolster revenue and earnings made overseas by multinational companies.

"No additional members voted to hike rates after MPC Member Kristin Forbes' departure at the end of June. This likely disappointed some traders' speculation that [BOE Chief Economist] Andy Haldane might change his vote after recently striking a less dovish tone, or that there could be a surprise hike," said Alexandra Russell-Oliver, currency markets analyst at Caxton, in a note.

Sterling also fell against the euro , to EUR1.1099 from EUR1.1153 late Wednesday.

"The U.K. economy is faltering and consumer purses are under pressure, so it's no surprise the Bank of England has decided not to upset the applecart by raising interest rates," said Laith Khalaf, senior analyst at Hargreaves Lansdown. "June also saw a surprise drop in inflation, relieving pressure on the central bank to tighten policy."

Stock movers: ConvaTec Group PLC (CTEC.LN) shares dropped 6.8% after the company's first-half operating profit fell to $193.5 million from $209 million a year ago. The medical technology maker said its Chief Financial Officer Nigel Clerkin will leave (, but will continue as a director and CFO until Oct. 31.

But Randgold Resources Ltd. shares (RRS.LN) bounced up 3.7%. The African gold miner said it's on course to meet the top end of its 2017 production guidance (, and that second-quarter pretax profit rose to $150.2 million.

London Stock Exchange Group PLC (LSE.LN) tacked on 2.7% as the exchange operator raised its interim dividend 20% ( and said all its business areas are operating well.

Economic docket: Investors got a snapshot on the services sector, which makes up roughly 80% of British economic activity. The IHS Markit/CIPS services purchasing managers' index for July rose to 53.8, from 53.4 in June. It was expected to come in at 53.5 for July, according to a FactSet poll of economists.

(END) Dow Jones Newswires

August 03, 2017 08:04 ET (12:04 GMT)