Trading slow on London market

Trading on the London market eased today as investors registered their disappointment with the Bank of England’s decision to leave interest rates on hold.

Last night’s surprise move by the US Federal Reserve to cut rates by 0.5% - most commentators had been looking for a 0.25% reduction – had fuelled hopes of a similar move in the UK.

Just before the Bank’s announcement at midday, the FTSE 100 Index rose to its highest point of the session so far – 4147.1.

But following the decision, it slipped back by around 25 points.

Martin Dobson, head of dealing at NatWest Stockbrokers, said the market was “a little bit disappointed” but still believed a cut was likely before the end of year.

By lunchtime, the FTSE 100 Index was up 15.3 points at 4119.0.

On top of the interest rate decision, traders were digesting a raft of corporate news, including the admission from BT that it was unlikely to meet revenues targets over the next three years.

However, shares rose 10p at 198.25p as the City welcomed a 2% rise in half-year revenues and a 57% surge in pre-tax profits.

BT topped the Footsie risers board and figured alongside Royal & Sun Alliance after the troubled insurer announced plans for further cost-cutting measures, including cutting up to 12,000 jobs worldwide.

Shares rose 3.5p to 121.5p as traders also expressed relief that R&SA was not proceeding with a rights issue to raise funds.

Elsewhere, pharmaceuticals giant AstraZeneca surged 68p to 2343p after it received the go-ahead to sell its cholesterol-lowering drug Crestor in the Netherlands.

Rival GlaxoSmithKline also rose, up 24p to 1283p while Shire Pharmaceuticals, which posted third-quarter figures in line with forecasts yesterday, moved 13p ahead at 517p.

And power group Scottish & Southern Energy pleased the market with an upbeat set of interim figures, rising 5.75p to 351.75p.

On the downside, drinks giant Diageo fell almost 10p at 708p after it emerged that the terms of its agreement to sell fast-food chain Burger King were under review because of a downturn in trading conditions.

And Boots fell 13.5p at 584.5p as the health and beauty chain showed how higher pension costs and store refits had led to a dip in half-year operating profits.

But among smaller stocks, Big Food Group surged 8.25p to 57.75p – a 17% jump - after revealing frozen food chain Iceland was profitable again following a slide in sales earlier this year.