By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- The U.K.'s FTSE 100 index snapped a
five-day winning streak and the pound climbed on Wednesday after
minutes from the latest Bank of England policy-setting meeting
showed two members were in favor of hiking interest rates.
The FTSE 100 index dropped 0.3% to 6,758.19, after closing at
the highest level since late July on Tuesday.
Among losers in the benchmark, shares of Antofagasta PLC dropped
1% after the copper producer's executive chairman, Jean-Paul
Luksic, decided to become nonexecutive chairman from Sept. 1.
BHP Billiton PLC (BHP) added to its 4.9% loss from Tuesday and
shed 0.7% after Credit Suisse cut the miner to underperform from
neutral.
Investors also reacted to the minutes from the BOE's August
meeting. Two members of the Monetary Policy Committee voted in
favor of increasing benchmark interest rates by 25 basis points, to
end a five-year period of record low interest rates of 0.5%. All
nine MPC members voted in favor of keeping the bank's
quantitative-easing program at 375 billion pounds, or $623.36
billion.
Higher interest rates would be supportive for the pound, and
sterling climbed as high as $1.6680 after the minutes were
released, pulling back to $1.6640 at latest check, from $1.6631
ahead of the report.
"[Now] we know that we have two hawkish members in the
committee, this has lowered the bar for an increase in the interest
rate this year," said Naeem Aslam, chief market analyst at Ava
Trade.
However, the BOE decision was made before inflation data for
July showed U.K. growth in consumer prices was weaker than
expected, which eased pressure on the central bank to immediately
tighten policy.
Outside the main index in London, shares of Balfour Beatty PLC
tumbled 6.8% after the U.K. construction firm rejected a sweetened
merger offer from Carillion PLC . Carillion shares lost 3.1%.
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