Homebuilders, financials boost FTSE 100 ahead of BoE rate decision

Homebuilders and financial stocks lifted the FTSE 100 on Thursday ahead of a Bank of England meeting where investors' focus will be on signs the central bank was joining its U.S. peer in taking a hawkish tone to its monetary stimulus.

Homebuilders and financial stocks lifted the FTSE 100 on Thursday ahead of a Bank of England meeting where investors' focus will be on signs the central bank was joining its U.S. peer in taking a hawkish tone to its monetary stimulus. The blue-chip FTSE 100 gained 0.2%, with heavyweight homebuilders jumping 1.2% following upbeat half-yearly earnings from Crest Nicholson Holdings Plc.

Shares of Crest, which also reinstated its dividend, jumped 4.5% to a two-week high, while Berkeley Group, Barratt Developments and Taylor Wimpey topped the FTSE 100. The mid-cap FTSE 250 fell 0.1%.

The export-heavy FTSE 100 is on course to post its fifth straight monthly gain on the back of a steady economic recovery, but recent signs of a jump in inflation have sparked fears central banks could raise interest rates sooner than expected. "Inflation effects remain the number one concern even if most of the pressure remains transitory," said Stefan Koopman, senior markets strategist at Rabobank.

"If inflation pulls ahead for longer, then more companies will begin to offload this added pressure on to consumers, which will prove to be a negative force in the short term." After the U.S. Federal Reserve spooked markets by taking a surprisingly hawkish tone to monetary stimulus last week, focus on Thursday will be on the Bank of England's stance on inflation, which broke above its 2% target in May. The decision is due at 1100 GMT.

Construction, banking and healthcare-related stocks were among the biggest gainers, while travel and leisure and real estate stocks led the declines. In company news, St. Modwen Properties rose 0.5% after Blackstone Group sweetened its buyout offer for the company to 1.25 billion pounds ($1.75 billion), while business supplies distributor Bunzl Plc hit a near two-month high on higher revenue expectations.

 

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