By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- U.K. stocks turned higher in midday
trade on Thursday after the Bank of England kept monetary policy on
hold and maintained interest rates at a record low. Up next is the
European Central Bank decision, which could also move the
markets.
The FTSE 100 index rose 0.1% to 6,824.21, on track to break a
two-day losing streak.
The benchmark traded as low as 6,795.27 earlier in the day, but
started to move higher after the BOE kept its key lending rate at a
record low of 0.5% and made no changes to its 375-billion-pound
($628 billion) asset-purchase program.
The decision was widely expected as the central bank has
signaled a rate hike won't be in the cards until 2015. However,
after a string of solid economic data, some analysts have started
to speculate that its first monetary tightening could come as early
as the fall of 2014.
The rate decision wasn't accompanied by any statement, so
investors will have to wait until the BOE policy-meeting minutes,
out on June 18, to see whether any members voted in favor of
monetary tightening.
The minutes from the May meeting showed some Monetary Policy
Committee members see the rate-hike discussion as becoming "more
balanced".
"The key will be whether the language becomes more hawkish, how
vigorous the discussion of a hike was, and what small changes the
rate setters make to their view of spare capacity and growth," said
Rob Wood, chief U.K. economist at Berenberg, in a note.
European Central Bank policy makers also meet on Thursday, and
expectations are for a rate cut and a package of liquidity measures
to boost bank lending, spur growth and lift inflation.
Weighing on the London benchmark, shares of BHP Billiton PLC
(BHP) dropped 0.2% after RBC Capital Markets shifted its preference
within the mining space from BHP to Rio Tinto PLC (RIO).
Outside the main index in London, shares of ASOS PLC plunged 29%
after the online retailer warned full-year profit would fall short
of forecasts because of the strong British pound, higher
promotional activity and infrastructure investments.
More must-reads from MarketWatch:
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U.K.'s economy is still vulnerable: BOE official
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