By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Banks moved mostly higher in London on
Wednesday after the Bank of England eased liquidity rules, while
the broader U.K. market dropped for a second straight day on
ongoing fears of a U.S. military invention in Syria.
The FTSE 100 index lost 0.2% to close at 6,430.06, adding to a
0.8% loss from Tuesday.
Banks were among few stocks on the rise in the U.K. index, after
the BOE said that banks meeting the minimum 7% capital threshold
will be able to reduce the level of required liquid asset holdings.
Such a move should free up 90 billion pounds ($139 billion) of
credit for households and businesses.
Shares of Royal Bank of Scotland Group PLC (RBS) added 1.8%,
Lloyds Banking Group PLC (LYG) rose 1.7% and Barclays PLC (BCS)
picked up 1.4%.
BOE Governor Mark Carney also reiterated that the central bank
will keep interest rates low until the unemployment rate drops to
at least 7%, while also saying more stimulus could be on the table
if needed.
"We suspect that further yield curve steepening could prompt
some members to renew their calls to restart asset purchases," said
Victoria Clarke, economist at Investec Securities.
"However due to the steady flow of positive releases pointing to
the U.K. economy gaining recovery momentum, we now hold the view
that the MPC as a whole will resist any temptation to sanction any
more QE," she added.
Weakness for the broader U.K. market comes on the back of
heightened fears that the U.S. will launch a strike against Syria,
after allegations that forces loyal to the government of Bashar
al-Assad used chemical weapons against rebels. White House
spokesman Jay Carney said on Tuesday President Barack Obama is
still consulting with allies and members of Congress on Syria, but
said there "must be a response."
The uncertainty sent waves of nervousness through the financial
markets with global equity markets moving sharply lower and oil
prices (CLV3) jumping above $110 a barrel, the highest level in
more than two years.
The move in oil prices lent support to London's oil firms.
Shares of BG Group PLC rose 4.8%, Royal Dutch Shell PLC added 2%,
BP PLC (BP) picked up 1.2% and Tullow Oil PLC gained 1.2%.
Mining firms, however, were among sectors on the decline.
Antofagasta PLC lost 1.1%, Rio Tinto PLC (RIO) dropped 0.6% and BHP
Billiton PLC (BHP) gave up 0.3%.
Among miners outside the main index in London, shares of
Polymetal International PLC dropped 5.8% after the precious-metals
miner said it swung to a loss in the first half of 2013 as revenue
declined 6%.
Shares of Meggitt PLC fell 1.1% after the aerospace and defense
group agreed to take over Piezotech LLC for $41.2 million.
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