15th Jan 2015 11:05
LONDON (Alliance News) - London stocks lost early gains Thursday after the Swiss National Bank unexpectedly removed the minimum exchange rate for the euro against the Swiss franc, sending the euro sharply lower and roiling European equity markets.
The FTSE 100 is trading 0.8% lower at 6,336.58, down from its intraday high of 6,472.91 after the Alpine nation's central bank removed the floor for the euro of CHF1.20 and lowered its deposit rate to minus 0.75%. The euro fell sharply against the Swiss franc and mid-morning is quoted at CHF1.0356. The FTSE 250 also lost early gains and is down 0.3% at 15,825.95, while the AIM All-Share index is down 0.1% at 696.73.
"With pressures mounting over the depreciation of the euro and the strength of the US dollar, the national bank has felt under pressure to at least amend the currency floor," says James Hughes at Alpari. "Many had been expecting the SNB to raise the currency floor but to remove it totally has taken everyone by surprise."
The DAX-30 is faring better than other indices and is up 0.4%, while the CAC-40 in Paris is down 0.2%.
Wall Street is forecast to follow European markets lower, with the DJIA called to open down 0.3%, the S&P 500 down 0.2% and the Nasdaq 100 down 0.3%. Weekly US jobless claims are due at at 1330 GMT and the Philadelphia Fed Manufacturing Survey at 1500 GMT. Earnings from Bank of America and Citigroup are also due before the bell.
Figures from Spain showed the country fell further into deflation in December, with consumer prices falling 0.6% on the month from a fall of 0.4% in November, raising the possibility that the European Central Bank could introduce further stimulus soon.
The data follow Wednesday's European Court of Justice positive assessment of the European Central Bank's so-called Outright Monetary Transactions programme. The decision gives a green light to ECB President Mario Draghi to launch a government bond-buying programme, possibly as early as next week when the ECB policy-making council meets for the first time this year.
Brent crude is quoted up at around USD48.31 a barrel Thursday after touching a new six-year low of USD45.16 during Tuesday's session. US benchmark West Texas Intermediate is quoted at USD47.42 a barrel, up from a low on Tuesday of USD44.17.
"A rebound in oil prices over the last couple of days provides some reprieve for energy stocks and other sectors continue to be supported by expectations that the ECB will announce its own version of quantitative easing this time next week," says Craig Erlam at Alpari.
In corporate news, Experian shares are up 3.3% after saying it is confident of returning to a position of revenue growth as it approaches the end of its financial year.
Associated British Foods is up 1.2%. It said it expects a marginal fall in its adjusted earnings per share in the current financial year, as strong growth at its Primark fashion retailer is more than offset by further profit declines in its sugar business and due to the strength of sterling. Primark sales rose 12% in the 16 weeks to January 3, or 15% at constant currency.
Home Retail Group shares are down 7.2%, the most in the FTSE 250. The retailer said like-for-like sales at its Argos unit rose just 0.1% in its fiscal third quarter and Homebase sales were up 0.6%. Total sales rose 0.8% due to increased retail space.
Bovis Homes shares are off 5.5% despite a positive trading statement. The house builder said it expects a significant rise in full-year profit after a 29% rise in completions and an 11% rise in selling prices to GBP216,000.
Japan's Nikkei closed up 1.9% at 17,108.7. The Hang Seng in Hong Kong closed up 1% at 24,350.91, and the Shanghai Composite ended 3.5% higher at 3,336.455.
By Ian Edmondson; [email protected]
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