FTSE as low as 2005
Leading U.K. stocks slumped to the lowest since 2005, led by retailers and travel companies on concern a slowing economy will curb consumer spending.
The slump in the FTSE 100 Index came as the Bank of England left interest rates unchanged.
The FTSE 100 Index retreated 122.8, or 2.2 percent, to 5,406.8 in London as all but 11 stocks declined. The FTSE All- Share Index fell 2.1 percent while Ireland’s ISEQ Index lost 2.1 percent.
Meanwhile there was speculation of a split at the Bank of England in rate policy. The minutes of the meeting will be released on 23 July, but economists believe the nine member rate setting committee are likely to have disagreed over the vote.
“We suspect the debate was quite tricky, given the disparity between slowing economic growth and soaring inflation. There may even have been a three way split in votes, between easing, on hold and hiking,” said Michael Saunders, economist at Citigroup.
Arch dove David Blanchflower, who has voted for a cut in the past nine meetings, is expected to have voted for a cut again.
But economists say more members may have joined him, given their growing concern about a slowdown . “Wide splits amongst policymakers will lead to further doubts over whether the Committee are fully convinced that slowing growth during the remainder of 2008 will help to bring inflation back to target by early 2010,” warned Stephen Gallo, head of market analysis at Schneider.