LONDON — The British pound surged Thursday while the country's main stock index faltered after the Bank of England held off from cutting interest rates. Elsewhere in Europe, stocks retained their recent positive tone, which has been partly due to the swift appointment of Theresa May as Britain's new prime minister.
KEEPING SCORE: Germany's DAX was up 1.1 percent at 10,036 while the CAC-40 in France rose 0.8 percent to 4,371. The FTSE 100 index of leading British shares was only 0.1 percent firmer at 6,800. U.S. stocks were poised for solid gains at the open with both Dow futures and the broader S&P 500 futures up 0.8 percent.
BRITISH FOCUS: The reason why the FTSE 100 in London was underperforming its peers in Europe was the Bank of England's surprise decision not to reduce its main interest rate from the current record low of 0.5 percent despite clear evidence that the British economy has faltered in the wake of the country's vote to leave the European Union. The decision was somewhat a surprise — most economists had expected the central bank to cut its main interest rate. However, the bank signaled its intention to stimulate the British economy at its next meeting in three weeks when policymakers will be armed with fresh economic forecasts.
POUND BUOYED: Though stocks in London came back off session highs after the Bank's decision not to act, the pound had one of its best days since the vote. In the immediate aftermath of the bank's announcement, the pound was up 1.9 percent at $1.3367 and 1.5 percent firmer at 1.20 euros.
ANALYST TAKE: "We believe it is too early for the Bank to have any meaningful data on how the economy and financial conditions are being affected by the confidence shock ensuing from the EU referendum outcome, and therefore too early to calibrate the appropriate policy response," said Hetal Mehta, senior European economist at LGIM.
US DATA: The focus will likely remain on developments in Britain through the day as May completes her Cabinet reshuffle. However, there's some U.S. data that could well have a bearing on trade, including weekly jobless claims and producer price figures.
ASIA'S DAY: Japan's Nikkei closed nearly 1 percent higher at 16,385.89 as the yen weakened against the dollar. Hong Kong's Hang Seng index rose 1.1 percent at 21,561.06. China's Shanghai Composite index fell 0.2 percent to 3,054.02. Australia's S&P ASX 200 was up 0.4 percent at 5,411.60. South Korea's KOSPI was up 0.2 percent at 2,008.77.
CURRENCIES: The euro was up 0.5 percent at $1.1156 while the dollar spiked 1.4 percent to 105.61 yen.
ENERGY: Benchmark U.S. crude rose 91 cents at $45.66 a barrel while Brent crude, a standard for international oil prices, added 98 cents to $47.24 a barrel.
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