Markets: Sterling falls after King’s comments

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SIGNALS from the Bank of England that interest rates will remain at historic lows for years to come pushed the Footsie up to near a five-year high yesterday – but caused investors in sterling to take flight.

Sir Mervyn King’s flexible stance on inflation targets saw an already-wobbly pound drop to six-month lows against the dollar as the Bank’s governor said above-target inflation would be tolerated in order to support economic recovery. The FTSE 100 index meanwhile rose 20.73 points to 6,359.11. An 
announcement from oil explorer Tullow that it had found the “first potentially commercial production” in Kenya was 
greeted with a 6.8 per cent boost to its share price to 1,260p, handing it the top position on the 
risers’ board.

Macquarie analyst Mark Wilson said the Africa-focused group had “pulled a rabbit out of the hat” by revealing progress on its Twiga South-1 well, predicting it could produce more than 2,850 barrels of oil a day – a far cry from the more modest 500 it had predicted in a downbeat trading update in January.

Tesco shares enjoyed a 0.6 per cent fillip to 374.25p after it agreed a £490 million sale-and-lease-back deal on seven of its sites in a 50-50 joint venture with the Cambridge University Endowment Fund. The company also boosted its boardroom diversity quotient with the appointment of Olivia “Liv” Garfield as a non-executive director.

Tesco said the chief executive of Openreach, part of the BT Group, would bring “valuable experience of new and emerging technologies to the board”.

Falls were sparked after a raft of leading blue-chip firms went “ex-dividend”, including AstraZeneca, Shell and BP, which fell by 68.5p to 2,950p, 29p to 2,186p and 6.5p to 453.69p respectively.

NEW YORK: Wall Street finished mixed last night in light trading as investors were cautious after the S&P 500 index briefly hit its highest intraday level since November 2007.

The Dow Jones industrial average dropped 36.56 points, or 0.26 per cent, to close at 13,982.14 while the broader Standard & Poor’s 500 Index gained 0.81 point, or 0.05 per cent, ending the day on 1,520.24. The Nasdaq Composite Index added 10.38 points, or 0.33 per cent, to finish on 3,196.88.