(MENAFN- AFP) The Bank of England trimmed its growth outlook on Thursday due to slowing emerging markets, leaving London stocks in the red while eurozone stocks gained ground.
While the BoE sees the British economy slowing to 2.5 percent growth in 2016 from 2.7 percent this year and a bout of negative inflation, it made no indications about increasing monetary stimulus and left its key interest rate at a record-low 0.50 percent.
That helped to push down London's benchmark FTSE 100 index slid 0.75 percent compared with Wednesday's close to 6,364.90 points at the close.
"When looking at UK economic data alongside US economic data there does appear to be a much more compelling case for raising rates in the UK than there does in the US, yet all the talk is about the prospect of a US rate rise next month," said Michael Hewson, chief market analyst at CMC Markets UK.
However, the BoE only noted that market expectations for it beginning to raise interest rates had been pushed back to the first half of 2017, compared with mid-2016 back in August.
It expressed confidence that such a delay would be sufficient to support domestic demand and gradually bring inflation back up despite global weakness.
"Following yesterday's upside moves in global equity indices, the FTSE is underperforming its European peers," noted Brenda Kelly, head analyst at London Capital Group.
In contrast to London, Frankfurt and Paris ended the day higher.
Frankfurt's DAX 30 won 0.39 percent to 10,887.74. But there was no respite for Volkswagen, which shed another 2.94 percent after German prosecutors launched an investigation into new allegations that the firm lied about the carbon dioxide emissions of up to 800,000 cars, adding to a pollution-cheating scandal.
Paris' CAC 40 index climbed 0.64 percent to 4,980.04 having earlier just breached the 5,000 mark.
European airline share prices saw no turbulence from the decision of Britain and Ireland to suspend air links to Sharm el-Sheikh over concerns a Russian flight home from the Egyptian tourist resort may have been brought down by a bomb.
IAG, the parent company of British Airways, climbed 0.17 percent to 580.50 pence.
Lufthansa, which also canceled flights to Sharm el-Sheikh on Thursday, lost 3.84 percent to close at 13.51 euros in Frankfurt.
In foreign exchange, the euro fell to a three-month low at $1.0834, but later rebounded to $1.0867 from $1.0865 late on Wednesday in New York.
The British pound held steady against the dollar until the BoE decision, after which it slumped around 1 percent.
- Investors like Facebook earnings -
Earlier Thursday, major Asian markets mostly shrugged off a negative lead from Wall Street, with Shanghai performing especially strongly and Japan Post shares soaring again in Tokyo.
Tokyo's benchmark Nikkei 225 index climbed 1.0 percent and Shanghai 1.83 percent.
Facebook shares bolted higher Thursday following a big earnings jump as US equities registered modest gains in opening trade.
Five minutes into trade, Facebook was up 4.5 percent mid-afternoon after posting an 11 percent gain in third-quarter profits to $891 million behind a 41 percent surge in revenues to $4.5 billion. Many of Facebook's gains came from higher mobile advertising revenues.
The Dow Jones Industrial Average added 0.06 percent to 17,878.13 points mid-afternoon.
The broad-based S&P 500 was down 0.35 percent at 2,102.31, while the tech-rich Nasdaq Composite Index was off 0.34 percent at 5,124.96.
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