UK’s FTSE 100 slips after dour earnings; BoE hikes rate as expected

By Shashwat Chauhan, Rupali Chaudhary and Khushi Singh

(Reuters) -Britain’s FTSE 100 was dragged down by a flurry of downbeat earnings on Thursday though the export-heavy index regained some ground after the Bank of England (BoE) raised interest rates by a quarter percentage point as largely expected.

The blue-chip FTSE 100 lost 0.4%, after falling as much as 1.6% before the BoE’s rate decision.

The BoE raised its key interest rate to a 15-year peak of 5.25%, offering some respite to market participants who had been concerned about a larger rate hike.

“It’s a relief that the BoE only moved by 25 basis points because half (a percentage point) would have risked being a policy mistake,” Andrew Bell, CEO of Witan Investment Trust, said.

“Where the bank goes from here is going to be much more data dependent in terms of further rate hikes.”

The BoE gave a new warning that borrowing costs were likely to stay high for some time.

Rate-sensitive homebuilders, however, added 0.2% while the real estate sector rose 1.0%.

Stocks also came under pressure globally as U.S. bonds yields hit nine-month peaks following strong private jobs data and the announced refunding of Washington’s maturing debt. [US/]

Meanwhile, the final reading of July UK S&P Global Services Purchasing Managers’ Index (PMI) showed growth across British services companies slowed to its lowest level since January.

Telecom firm BT Group and consumer staples major Unilever were drags, down 4.2% and 1.4% respectively, as their shares traded ex-dividend.

The aerospace and defence sector, however, was a bright spot, up 1.5%, boosted by a 4.5% gain in Rolls-Royce on a strong recovery in profit.

The more domestically-focussed FTSE 250 midcap index added 0.1%, lifted by Helios Towers.

Mondi slumped 6.7% after reporting a 28% drop in half-yearly underlying core profit.

Smith+Nephew lost 2.4% after the medical products maker missed first-half yearly profit estimates.

(Reporting by Shashwat Chauhan and Rupali Chaudhary in Bengaluru; Editing by Varun H K and Andrew Heavens)