Markets: Markets cautious despite QE boost

The FTSE 100 Index had surged through the 5,700 mark after the Bank of England announced an extra £50 billion of quantitative easing and the People’s Bank of China weighed in with a rates cut. But it ended just 8.2 points ahead at 5,692.6 as European Central Bank president Mario Draghi choose to focus on the economic risks still facing the continent in a speech given after cutting interest rates to a record low.

Angus Campbell, head of market analysis at Capital Spreads, said: “Following the bearish comments from Draghi, and even though people are aware that the economic situation really is bad, a realisation set in that things are worse than before.”

Engineering group GKN powered to the top of the risers’ board after it bought the aero engine division of Sweden’s Volvo for £633 million. Investors backed the deal as GKN will benefit from global growth in aircraft orders, sending the shares soaring 13 per cent to 211p.

Shares in Barclays managed to continue their modest recovery even as the bank saw its credit rating outlook downgraded by agency Moody’s to reflect concerns over Bob Diamond’s resignation as chief executive. The embattled bank’s stock rose 2.2p to 168.2p as it recouped some of its recent hefty falls.

But the rest of the banking sector was under pressure amid continued fears that other lenders will be implicated in the rate rigging scandal. Royal Bank of Scotland was the biggest faller, down 3 per cent or 7.3p at 207.2p, while Lloyds Banking Group dropped 0.8p to 30.8p.

NEW YORK: Wall Street ended a quiet session with mostly modest losses despite moves by central banks around the world to loosen monetary policy.

The Dow Jones industrial average fell 47.15 points, or 0.36 per cent, to end at 12,896.67 while the broader Standard & Poor’s 500 Index lost 6.44 points, or 0.47 per cent, to finish at 1,367.58. The Nasdaq Composite edged up just 0.04 of a point, or 0.00 per cent, to end the day at 2,976.12.