LONDON MARKETS: FTSE 100 Gains As Mining Shares Advance; BOE Leaves Policy Unchanged

By Carla Mozee, MarketWatch

Bank of England holds key rate at record low

U.K. stocks edged higher Monday, building its last week's post general-election rally, with miners gaining after China made another move to stimulate its economy.

Meanwhile, the pound (GBPUSD) was little changed at around $1.5483 after the Bank of England Monday afternoon met market expectations by leaving the benchmark interest rate at 0.5%. Its quantitative-easing program was also left unchanged, at 375 billion pounds ($579.5 billion). Sterling late Friday bought $1.5375.

The FTSE 100 held to a gain of 0.2% at 7,057.36.

Investors will now turn their focus to the bank's quarterly inflation report, due Wednesday, "and two important factors will be wage inflation and core inflation. Given that oil prices have bounced fairly rapidly from their lows, the footprint will start emerging rather sooner," said Naeem Aslam, chief market analyst at AvaTrade, in a note.

Momentum for the U.K. economy has shown signs of picking up and "given the election uncertainty is over, we are expecting [Bank of England Governor Mark] Carney to increase his drum beat and show more of his hawkish side," said Aslam.

Mining stocks on Monday rose, after the People's Bank of China's decide on Sunday to cut its benchmark lending and deposit rates by a quarter of a percentage point (http://www.marketwatch.com/story/china-cuts-rates-as-economic-slowdown-deepens-2015-05-10). The third rate cut in six months highlights concerns about slowing in the world's second-largest economy.

Glencore popped up 2% and Anglo American PLC rose 1.8%. BHP Billiton PLC (BHP) added 1.5%, and Rio Tinto PLC (RIO) moved up 1.7%.

Decliners on the blue-chip index included InterContinentals Hotels Group PLC and HSBC PLC (HSBC), losing 1.4% and 0.6%, respectively.

The FTSE 100 on Friday jumped 2.3% (http://www.marketwatch.com/story/ftse-100-pound-leap-with-conservatives-on-track-for-election-win-2015-05-08) after the country's general election resulted in the Conservative Party taking a slim majority in the U.K. parliament.

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