Sterling rose to a fresh high for the day against the dollar Thursday after the Bank of England left policy unchanged and opted not to issue a statement, while the euro and German Bunds were stable as investors awaited further clues on future policy moves at the European Central Bank.
The European Central Bank left its key interest rates unchanged again, as expected, adding more importance to the news conference that follows.
“While the ECB’s decision to leave interest rates unchanged was fully anticipated, the press conference could offer more interesting hints about a near-term rate cut and measures to improve the Bank’s transparency,” said Jennifer McKeown, senior European economist at Capital Economics.
Earlier, the Bank of England left its benchmark interest rate and bond-buying program unchanged and opted not to issue a statement, despite having taken the unusual step to do so after the July meeting. In a policy review Wednesday, the central bank is expected to be more explicit about the conditions under which policy would be tightened, in a process known as forward guidance.
U.K. stocks briefly turned negative, government bonds slipped but sterling rallied against the dollar following the announcement.
By midday in Europe, the U.K.’s FTSE 100 was up 0.1%, Germany’s DAX rose 1.2% and France’s CAC-40 advanced 0.5%.
More generally in Europe, gains were underpinned by strength in the mining sector after manufacturing data from the euro zone and China beat expectations.
U.S. stock futures rose in tandem with European stocks, pointing to a firm start on Wall Street.
Corporate news in Europe was mixed, but banks had a strong showing.
Société Générale SA
shares rallied as second-quarter net profit more than doubled from a year ago, helped by its international retail business and stronger investment-banking revenue.
Lloyds Banking Group
PLC shares soared after the bank posted strong first-half profit and reported it is making faster-than-expected progress on shoring up capital.
Shares in Royal Bank of Scotland
rose as the bank was said to be eyeing Ross McEwan, the head of its retail bank, to replace Stephen Hester as chief executive, according to people familiar with the matter.
Shares in BAE Systems
PLC gained after the company reported strong growth in big-ticket orders and after delivering guidance on double-digit growth for the full year.
On the downside, shares in Royal Dutch Shell
PLC slumped after the oil and gas company posted a 60% fall in profit for the second quarter.
Sanofi
shares were also under pressure after the French drug maker reported weaker second-quarter earnings and lowered its earnings guidance for 2013.
Write to Nina Bains at nina.bains@dowjones.com
Source Article from http://online.wsj.com/article/SB10001424127887323681904578641401997503468.html
