LONDON MARKETS: Miners, Retail Updates Dull Mood In London

By Barbara Kollmeyer

MADRID (MarketWatch) -- A pullback for mining stocks and some gloomy corporate and economic news was darkening the mood for the FTSE 100 on Thursday, as the Bank of England held its key meeting to decide monetary policy.

The FTSE 100 index fell 0.1% to 5,674.34, less pronounced than some of the weakness on the Continent, but still breaking a two-day positive run.

Gold futures continued to push into record territory on Thursday, with the December contract touching $1.366 an ounce at one point, but miners were retreating from gains seen in recent days. Gold has been particularly strong on expectations central banks will be more likely to embrace another round of quantitative easing.

The Bank of England will announce its own decision on interest rates at 7 a.m. Eastern time. Though no one expects a change in key rates, using quantitative easing as a means of spurring economic growth is not out of the realms of possibility, say analysts.

Also pressuring markets, the Halifax House Price Index Thursday reported prices down 3.6% for September, the biggest monthly drop since records began in 1983. Other data showed industrial production rose 0.3% in August, up 4.2% on an annual basis, in line with expectations.

"Though the [Bank of England's Monetary Policy Committee] is widely expected to maintain interest rates at 0.5% for a 19th consecutive month, the announcement at midday gives traders a wait-until-we-see destination to look forward to, with the afternoon session likely to give greater clues as to whether the FTSE will build on two days of gains and push on towards 5,700," said Will Hedden, sales trader at IG Index.

The recent strong run seen by miners was too much for some investors to pass up, with selling across most big names such as Kazakhmys PLC, off 3.8%, and Antofagasta PLC , down 2.7%.

Retailers were putting in a mixed performance in London. Shares of Marks & Spencer rebounded from earlier losses and were last up 1% despite the fact it sees trading conditions worsening and costs rising.

Shares of smaller-cap retailer Mulberry Group jumped 17% after it said sales and profit for the year ending March 31 would come in well ahead of expectations. It said the Christmas trading period, though, would be crucial for the group.

Recruitment groups Hays PLC and Michael Page International PLC updated investors on trading and conditions. Shares of Hays fell 2.7% despite the group reporting a 21% gain in net fees in the fiscal first quarter, driven by a big rise in the Asia-Pacific region.

Michael Page shares fell 4.7%. The group said gross profit was up 37%, with permanent recruitment activity up and temporary activity also showing growth for the first time this year.