UK stocks were for the most part flat, having fluctuated between declines and gains, as the pound soared after European Central Bank President Mario Draghi proclaimed new sustained refinancing measures and cut interest and deposit rates for the euro zone.
Smith & Nephew Plc added 2.3% after reports from sources familiar with the on-goings said Medtronic Inc plans to make an overture for the medical implant-maker. Asos Plc dropped 31%, causing turbulence among online retailers, after the clothing business announced a reduced yearly profit outlook.
The FTSE 100 Index plunged 5.14 points, the equivalent of 0.1%, to 6,813.49 at the close in London. The gauge earlier fluctuated between a surge of 0.4% and loss of 0.3%. The UK stocks index has advanced 5.7% from a February 4, 2014 low. The FTSE All-Share Index, a wider measure, was also little changed. ISEQ Index added 0.3% on Thursday.
Stewart Richardson of London-based RMG Wealth Management LLP in London told Bloomberg by phone that UK stocks were witnessing more buying than selling off, with euro zone stocks attracting more.
“With the move into negative rates, there’s even more desire for yields in euro-zone assets. The ECB is clearly dangling the carrot of quantitative easing in front of markets. The rationale is clearly to weaken the euro,” added Richardson.
Earlier, the pound hit its highest level of strength against the euro since December 2012 after head of ECB announced implementation of a series of LTROs that are slated for September 2018 maturity. Initially, the central bank will pump up to $545 billion into the economy, Draghi said in Frankfurt after an ECB meeting.
According to Reuters, the gauge of UK equities plunged earlier under the pressure of mining shares. The FTSE 350 Mining Index dropped 0.5% on reports that China’s services sector had plummeted to a four-month low last month.
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