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London Market Report London Market Report
(about 3 hours later)
(Afternoon): The pound surged against the euro after the European Central Bank announced a raft of measures to boost the eurozone and avert deflation. (Close): Stocks in London failed to share the euphoria that spread through European markets immediately after the European Central Bank announced a raft of measures to tackle poor growth and the threat of inflation in the eurozone.
The ECB cut its benchmark interest rate to 0.15% from 0.25% and lowered its deposit rate below zero, to -0.1%, to try to force banks to lend to business. As well as cutting its benchmark interest rate to 0.15% from 0.25%, the ECB lowered its deposit rate below zero, to -0.1%, to try to force banks to lend to businesses.
The ECB also offered banks new long-term funds. London's benchmark FTSE 100 index closed 0.08% lower at 6,813.49 points.
The measures pushed the value of the euro down. The pound rose 0.4% against the euro to 1.2360 euros. Despite the ECB moves, European shares ended on a mixed note.
Soon after the ECB's announcement, Frankfurt's DAX 30 soared about 10,000, but it ended up 0.21% at 9,947.83 points. In Paris, the CAC 40 in Paris closed 1.06% higher at 4.548,73 points, its highest point since June 2008.
Central Markets trading analyst Joe Neighbour said: "The FTSE is getting left behind. The DAX keeps breaking new record highs, but the FTSE keeps coming up short."
Earlier the Bank of England had left UK interest rates unchanged at 0.5% as expected.Earlier the Bank of England had left UK interest rates unchanged at 0.5% as expected.
On the stock market, the benchmark FTSE 100 index was up 10.56 points at 6,829.19. The ECB's measures initially pushed the value of the euro down, but it soon stabilised. At the close, the pound was 0.16% higher at 1.23280 against the euro.
Medical devices company Smith & Nephew rose 3.1% as the takeover speculation surrounding the company continued. The biggest faller on the FTSE 100 was the housebuilder Persimmon, the Halifax recorded the strongest monthly uplift in house prices since 2002.
That raised fears that the Bank of England will take steps to cool the current property boom.
Shares in Persimmon fell 5.26%.
Medical devices company Smith & Nephew closed 2.6% higher, as the takeover speculation surrounding the company continued.
US company Medtronic is the latest company to be named as a possible suitor. Last week, it was reported that US firm Stryker was considering making a bid for Smith & Nephew, although Stryker subsequently denied the report.US company Medtronic is the latest company to be named as a possible suitor. Last week, it was reported that US firm Stryker was considering making a bid for Smith & Nephew, although Stryker subsequently denied the report.
Outside the FTSE 100, the biggest story came from online fashion retailer Asos, which saw its shares sink 31% after it issued a profit warning. Outside the FTSE 100, the online fashion retailer Asos saw it shares plunge 31%, after it issued a profit warning.
Asos said the strength of the pound had hurt overseas sales and forced it to launch a series of promotions. Asos said the strength of the pound had hurt its overseas sales and forced it to launch a series of promotions.
That had a knock-on effect on shares in other clothing retailers.
Shares in Associated British Foods, which owns Primark, fell 0.46% and shares in Next were down 0.08% by the close.
Property website Zoopla announced the price range for its forthcoming flotation. It said its shares would be priced at between 200p and 250p, which would value the firm at about £940m.Property website Zoopla announced the price range for its forthcoming flotation. It said its shares would be priced at between 200p and 250p, which would value the firm at about £940m.