By Simon Kennedy
LONDON (MarketWatch) -- U.K. stocks traded little changed
Wednesday as investors assessed the impact of the government's plan
to cut spending as well as the minutes of the latest Bank of
England rate-setting meeting.
The FTSE 100 index stood essentially unchanged at 5,703.03 as
other European markets traded mostly higher.
The Bank of England's October meeting minutes showed seven
members of the rate-setting committee voting to leave both interest
rates and asset repurchases unchanged. One called for an increase
in its quantitative-easing program, however, while another wanted
rates raised by a quarter of a percentage point.
The central bank said that some of its members felt there was an
increased likelihood that further monetary stimulus would be
necessary but that "evidence was not sufficiently compelling" to
imply such a course of action should be undertaken at once.
Also Wednesday, Chancellor of the Exchequer George Osborne set
out more details on his plan to slash government spending in a bid
to eliminate the nation's structural deficit. He said government
departments will on average see their budgets cut by 19%.
Among stocks on the move Wednesday, shares of oil and gas
companies traded lower, with BG Group dropping 1.4% and BP PLC (BP)
losing 0.7%.
However, mining giants BHP Billiton (BHP) and Rio Tinto (RIO)
helped offset that impact on the FTSE 100, as both companies'
shares rose about 1.5%.
The moves came after BHP Billiton reported a 6% rise in iron-ore
output and also followed a Wall Street Journal report that the
company's $39 billion bid for Potash Corp. of Saskatchewan (POT) is
expected to be rejected by the Saskatchewan government. See story
on BHP.
Separately, Rio Tinto announced it would invest $3.1 billion to
boost its iron ore-production in Australia.
Among mid-cap companies, shares of Hansen Transmissions
International slumped more than 16% as the company slashed its
revenue forecast. The maker of gearboxes for wind turbines said
revenue for fiscal 2011 will fall about 10% as customers delay
deliveries, as opposed to its previous projection calling for
revenue to rise between 5% and 10%.
Stobart Group was another big decliner in the mid-cap FTSE 250
index. The stock dropped 9% after the transport and logistics
company trimmed its profit forecast for the fiscal year amid rising
finance costs and concerns that an increase in the rate of
value-added tax could hurt volumes.