6th Mar 2014 10:49
LONDON (Alliance News) - Stocks are slightly higher in the UK and Europe Thursday, with life insurer Aviva leading the London blue-chip index, but Bank of England and European Central Bank policy meetings may set the tone for afternoon trading.
By mid-morning Thursday, the FTSE 100 is up 0.1% at 6,780.80, the FTSE 250 is up 0.3% at 16,658.53, and the AIM All-Share is up 0.3% at 895.48.
Major European markets are also higher, with the CAC 40 lifted after the French unemployment rate fell to 10.2% in the fourth-quarter, marking the first fall in 2.5 years. The CAC 40 is up 0.6% and the DAX 30 up 0.2%.
Aviva is the biggest gainer on the FTSE 100, up 8.5%, after it reported results ahead of expectations and a GBP1.7 billion reduction in its inter-company loan.
Aggreko shares are also doing well, up 7.9%, after it raised its dividend as cash generation remained strong. Profits fell, as expected, after last year was boosted by the London Olympics. The stock fell heavily last week when long-standing Chief Executive Rupert Soames was poached by Serco, but analysts say the company remains in good shape.
Schroders shares are up 5.6% after the bank announced a 24% rise in pretax profit. Canaccord Genuity raised its price target for the stock by 12%.
IMI is the biggest blue chip faller, down 6.4%, despite reporting an increase in profits in 2013. It warned of pressure on profit margins in the first half of 2014.
Balfour Beatty is also underperforming, with an 8.4% decline making it the biggest decliner on the FTSE 250. The construction giant reported a sharp drop in profit for 2013, saying it was hurt by the reorganisation of its UK construction business and a significant downturn in the Australian natural resources sector.
The major economic events are still to come Thursday. German factory orders are released at 1100 GMT and are expected to show a rise of 7.5% year-on-year in January, gathering pace from the 6.0% rise in December.
The Bank of England will announce its latest interest rate decision at midday, marking five-years of the UK's lowest ever interest rate by keeping the rate and its asset buying programme unchanged.
In the UK, the latest survey showed house prices rising at the fastest rate in five years. The Halifax house price index rose 2.4% in February, accelerating from a 1.15% rise in January and outstripping economist forecasts. Meanwhile, registrations of new passenger cars in the UK increased for the twenty-fourth consecutive month in February, according to the Society of Motor Manufacturers and Traders.
The European Central Bank is also expected to keep interest rates and its policy unchanged at 1245 GMT, but President Mario Draghi will be releasing 2016 inflation projections for the first time which could give some insight into future policy.
At the last meeting, the ECB forecast that eurozone inflation in 2014 and 2015 will be 1.1% and 1.3% respectively. All eyes will be on where the central bank sees the rate in 2016.
Forex.com research director Kathleen Brooks thinks the rate could be projected in the range of 1.6% - 1.7%. This would bring rates closer to the official 2.0% target and possibly spare the ECB from having to take further easing action. However, if the forecast is much lower it would give the ECB "little option but to loosen policy to try and boost prices," says Brooks.
The major currency pairs are stable ahead of the central bank announcements. Against the dollar, the pound trades at USD1.6718, while the euro trades at USD1.3730.
Also still to come Thursday, US initial jobless claims at 1330 GMT, followed by US factory orders at 1500 GMT.
By Jon Darby; [email protected]; @jondarby100
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Related Shares:
Balfour BeattyAGK.LAvivaSchrodersIMI