Footsie stagnant ahead of interest rate announcement

London shares trod water today as investors held their breath ahead of the Bank of England’s interest rate announcement.

After climbing 15 points in the first hour on a positive trading update from Royal Bank of Scotland, the FTSE 100 Index slipped back to stand 7.1 points ahead at 4711 by mid-morning.

Traders remained cautiously optimistic that the Bank’s Monetary Policy Committee would hold rates at 4.75%.

Shares also held steady as the January futures price of a barrel of US light crude rose to more than 42 US dollars ahead of tomorrow’s Opec meeting in Cairo.

In London, there was some bad economic news in the shape of official figures showing a widening trade gap and record imports.

On the corporate front, RBS said it was confident of meeting market hopes and offered assurances that any slowdown in UK consumer lending would have a minimal impact on its overall income.

Its shares rose 30p to 1673p, although other financial stocks that recorded earlier gains lost ground.

HBOS was down 6p at 764p, while Lloyds TSB drifted a penny to 429.5p and Barclays slid 1.5p to 548p.

Outside the top flight, pubs group Greene King added to earlier losses, down 50p to 1253p, after it said the outlook for 2005 was uncertain.

Sugar and starch group Tate & Lyle weakened 4% or 20.25p to 454.75p after more than 48 million shares were placed with investors, taking some of the shine off news that it will be elevated to the Footsie.

However, investors in Premier Foods licked their lips at the £70 million acquisition of the Bird’s Custard and Angel Delight brands from US giant Kraft. Shares in Premier rose 4% or 9p to 256p.

Shares in fresh foods group Geest were also on the up after it confirmed today it was in takeover talks. The stock put on nearly 3% or 16.5p to 616.5p.