(Major continental European stock markets were closed on
Thursday for the Labour Day holiday. The FTSE report serves as
the European stock report.)
By Michael Taylor
LONDON, May 1 (Reuters) - Britain's blue-chip index turned
positive midway through Thursday, as miners rose and banking
stocks headed south with major continental European stock
markets closed for the Labour Day holiday.
At 1039 GMT the FTSE 100 <> edged up 14.2 points, or
0.2 percent at 6,101.5. The FTSEurofirst 300 <> of top
European shares was up 0.2 percent at 1,340.67?
On the macro front, the Bank of England said the scale of
losses and the economic fallout from the credit crunch may not
be as bad as feared, and subprime write-offs could end up
costing less than half market forecasts. []
Banks, however, remained under pressure, with Barclays
<BARC.L>, Royal Bank of Scotland <RBS.L>, HBOS <HBOS.L>, HSBC
<HSBA.L> and Lloyds TSB <LLOY.L> down between 0.2 and 1 percent.
U.S. stocks fell overnight after the Federal Reserve trimmed
interest rates by 25 basis points to 2 percent as expected but
left unclear the outlook for further rate cuts, prompting
profit-taking.
The UK index, however, was little affected by data showing
that growth in Britain's manufacturing sector slowed in April,
as expected, but there was no let-up in inflationary pressures
as firms ratcheted up prices at the fastest rate on record.
[]
But U.S. personal consumption expenditure data and weekly
jobless claims due at 1230 GMT may offer direction later.
"The Fed is key to everything," David Scott, a senior
stockbroker at Redmayne-Bentley. "Rates are on hold now (and)
we're worried about inflation. The worry is that they don't
really have much ammunition left there."
"I don't think there is any confidence booster coming -- the
market is probably ahead of itself at above 6,000. What we will
now see is the market recoiling, saying 'we've had the U.S.
interest rate cuts, what now?' and start concentrating on
economic data."
On the upside, miners were in demand, tracking firmer metal
prices. Kazakhmys <KAZ.L>, BHP Billiton <BLT.L>, Rio Tinto
<RIO.L>, Xstrata <XTA.L>, Vedanta Resources <VED.L> and Anglo
American <AAL.L> were up between 2.8 and 5.8 percent.
In the oil and gas sector, heavyweight BP <BP.L> added 0.5
percent, and gas producer BG Group <BG.L> rebounded 3.8 percent
after shedding nearly 6 percent in the previous session. Royal
Dutch Shell <RDSa.L> was flat.
British Airways <BAY.L> gained 4.2 percent after the airline
said late on Wednesday it was in discussions with two of its
largest U.S. rivals American Airlines and Continental Airlines
<CAL.N>, which a source briefed on the matter said was about a
potential alliance.
Rexam <REX.L> tacked on 3.7 percent after the world's
biggest drinks can maker said first-quarter results were in line
with its expectations at constant currencies, and that its
outlook for the rest of the year remained unchanged.
On the downside, Smith & Nephew <SN.L>, Europe's biggest
maker of medical devices, lost 6.3 percent after it posted
higher adjusted first-quarter earnings per share but sales fell
short of average analyst expectations.
Kingfisher <KGF.L> slid 2.4 percent to 129.6 pence after
Goldman Sachs reduced its rating on the retailer to "sell" from
"neutral" and cut its price target to 110 pence from 137 pence.
Peer and Britain's biggest household goods retailer Home
Retail <HOME.L> slipped 3.5 percent, tracking back from a near 9
percent rise in the previous session after it reported full-year
profits at the top end of analysts' forecasts but reiterated
that the outlook for consumer spending was weaker this year.
(Additional reporting by Dominic Lau; Editing by David Cowell)
