Thur close: Royal Mail sale pushes index lower
A broad sell off in equities followed negative sentiment towards a number of high profile stocks including Royal Mail which fell 4.9% after Chancellor George Osborne said the Treasury will sell its 30% stake in the company.
Many of the top fallers traded without the attraction of their latest dividend payouts, with National Grid and WPP dropping 5.1% and 3.5% respectively. Commodity stocks were also weaker. The FTSE 100 closed down 1.3% at 6,859.24.
The Bank of England kept keep policy unchanged at 0.5% and the asset purchase programme at £375bn as it waited to see if the economy resumes its strong growth or continues to slow down.
In the May Inflation Report, the Bank governor Mark Carney expressed concern over productivity, and called for the EU referendum to be held “as soon as necessary” to avoid a protracted period of uncertainty.
In the report, the BoE revised its growth outlook downwards, but left its forecast for inflation broadly unchanged. The Bank expects the current period of zero inflation to pass as the data takes account of last year’s oil price slump. It is still expecting inflation to exceed its 2% target in 2017.
Interest rates are unlikely to rise until next year, the seventh year since they were cut to their current record low.