Feb 05 (Reuters) - The UK's FTSE 100 edged lower on Thursday, weighed down by Shell shares after the oil major posted weaker-than-expected quarterly profits, while investors awaited the Bank of
FTSE 100 Declines on Dovish BoE Comments; Rio Tinto Ends Glencore Merger Talks
Market Reactions to Bank of England's Dovish Stance
By Tharuniyaa Lakshmi
Impact on Banking Stocks
Feb 5 (Reuters) - Britain's FTSE 100 closed lower on Thursday as investors priced in further interest rate cuts following dovish comments from the Bank of England, while Glencore slid after Rio Tinto said it was no longer in takeover talks with the miner.
Merger Talks Between Rio Tinto and Glencore
The blue-chip index closed down 0.9%, easing from a record high touched in the prior session. The domestically focused mid-cap FTSE 250 dipped 1%.
Political and Economic Factors Affecting Markets
The BoE held rates at 3.75% after an unexpectedly narrow 5-4 vote, and indicated cuts ahead if an expected fall in inflation proves sustainable, with analysts perceiving the split to be a more dovish stance than anticipated earlier.
Banking stocks tumbled, with HSBC, Lloyds Banking Group and NatWest down 2.3%-6% as investors priced in a much higher chance of a near-term rate cut. The pound fell 0.76%.
"It's now merely a matter of timing as to when the MPC (Monetary Policy Committee) will deliver further easing," said Matthew Ryan, head of market strategy at Ebury.
"While we think that the next meeting in March will be a 'live' one, we are currently favouring an April cut, at which point officials should have further clarity on the progress towards the inflation mandate."
London‑listed metals fell, dragged lower by Rio Tinto, which fell about 2.6%, and Glencore, which sank 7%, after the two miners abandoned merger talks for the third time.
Shell fell 3.4% after the oil major's fourth-quarter net profit of $3.3 billion missed expectations, dropping 11% from a year earlier amid lower crude prices.
Political uncertainty also weighed, with concerns mounting over whether Prime Minister Keir Starmer could survive the fallout from his decision to appoint Peter Mandelson as U.S. ambassador despite knowing about his ties to the late sex offender Jeffrey Epstein.
On the flip side, technology stocks rebounded from a global rout seen earlier in the week. Analytics firm Relx was up 2.9%, while London Stock Exchange Group rose 5.8%.
(Reporting by Tharuniyaa Lakshmi in Bengaluru; editing by Sahal Muhammed, Shailesh Kuber and Mark Heinrich)
