London Report: FTSE pares back losses after ECB weighs rate cut

THE UK’s FTSE 100 was dragged down yesterday by heavyweight stocks such as Vodafone trading ex-dividend, but briefly pared its losses after a report that the European Central Bank was considering negative deposit rates.

Bloomberg reported that the ECB was considering a cut in its deposit rate to minus 0.1 per cent from the current zero.

“Comments from the ECB about a potential minus 0.1 deposit rate if more easing is required is market-positive,” said Atif Latif, director at Guardian Stockbrokers.

The FTSE 100 closed 16.93 points or 0.3 per cent lower at 6,681.08, after spiking to a session high of 6,711 shortly after the report that the ECB was considering charging lenders for parking money at the central bank.

The main weight on the FTSE 100 was Vodafone, Britain’s third-largest listed company by market capitalisation, which took nine points off the index.

Carnival, Next, Sainsbury and Tate & Lyle traded ex-dividend yesterday as well.

ITV was among the worst-performing FTSE 100 stocks, falling 1.5 per cent. Traders said the decline came after Bank of America Merrill Lynch (BofA ML) downgraded the free-to-air broadcaster to “neutral” from “buy”.

Ratings upgrades also set the course for some of the top gainers on the FTSE 100.

Fund firm Aberdeen Asset Management added 3.5 per cent, topping the list of FTSE 100 risers, after BofA ML raised its recommendation on the company to “neutral” from “underperform”.

EasyJet extended recent gains, climbing 2.4 per cent, as HSBC upgraded the low-cost airline to “neutral” from “underweight” following results on Tuesday.

BSkyB rallied 1.2 per cent after the pay-TV service said it wanted to make a deal with BT so each could offer its customers a full range of live sports. BSkyB slumped earlier this month after BT outbid it for exclusive rights to Champions League football.
The FTSE 100 remains up about 13 per cent since the start of 2013 but has slipped from late-October highs of around 6,819.

It is now below a technical support line at the 23.6 pct Fibonacci retracement of the rally that started in October, at 6,701.16 points. The next support lies at the 38.2 pct Fibo at 6,627.73 and the 50-day moving average.