Bank may not cut interest rate says King; FTSE declines sharply

Bank may not cut interest rate says King; FTSE declines sharply

	Published : Thu, 13 Oct 2005 16:05 By : Phil Bateman Print this Story

LONDON: The Footsie went on a sharp decline after hopes for a cut in interest rate were dashed by the Bank of England governor Mervyn King’s comments last night. Leading the decline was the retail sector with NEXT dropping 4 percent to 1,297p, its lowest in two years.

King said the Bank could not be expected to slash borrowing cost next month as there were contradicting trends from various sectors.

Analysts blame the poor performance on the high street for the decline in the FTSE 100. Retailer Marks & Spencer who were expected to gain market share also followed the downturn with share prices shaving 2 percent off to close at 395.25p.

A drop of 11.5p was also registered in share prices of GUS who reported a 3 percent drop in comparable sales at Argos - its catalogue business. Likewise, JJB Sports also retreated 2 percent to 194.5p after reporting a 4.3 percent drop in comparable sales; and Burberry shares plummeted 7 percent – 29.25p, to 383p as consumers tightened their belts.

The market lost all it had gained during the previous two sessions of trading with the exception of last week when it took a 115 point tumble on concerns that volatile fuel prices would hurt corporate profits.

There were a few exceptions, no doubt. Peacock, the clothing chain group rose 6.75 percent to 323.75p after reporting an upturn in second quarter sales; and Moss Bros also advanced 2p at 93.5p.

The gloom pervaded across the indices. The FTSE 250 dropped 52.1 points to 7,756.3 and the FTSE Small Cap index also receded 4.3 points to close at 3,102.8p.
Blue-chip shares declined 0.7 percent or 38.5 points, to close at 5,342.2 points, the lowest in a month.

The mood at the London Stock Exchange corresponded with that seen on Wall Street which opened weakly Wednesday morning. Apple Computer Inc reported financial performance that fell below market expectations, causing shares of its British supplier Wolfson Microelectronics to decline 4 percent or 8.25p to 203.5p.