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GLOBAL MARKETS-Stocks rise, pound drops as BoE cuts rates

Published 05/08/2016, 01:49 am
Updated 05/08/2016, 01:50 am
© Reuters.  GLOBAL MARKETS-Stocks rise, pound drops as BoE cuts rates
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* BoE cuts rates, restarts bond buying to ease Brexit blow

* European, UK shares rise, Wall Street little changed

* Dollar gains vs rivals, focus on U.S. jobs data Friday

* Oil gives up gains, oversupply worries weigh on prices (Updates to U.S. trading, changes byline, dateline previous LONDON)

By Saqib Iqbal Ahmed

NEW YORK, Aug 4 (Reuters) - Global equity markets rose on Thursday, helped by a rally in European shares after the Bank of England cut interest rates and revived a bond-buying program to cushion a blow to the economy from Britain's June vote to leave the European Union.

The launch of the policy easing measures hammered sterling and weighed on bond yields. Bank of England cut its main rate by a quarter percentage point to a record low 0.25 percent, and said it would take "whatever action is necessary" to achieve stability in the wake of Britain's vote to leave the EU. rate cut was widely expected but not the other measures.

"The Bank of England has hit a perfect 'High Five' at today's meeting, over-delivering against market expectations and bucking the recent trend of central banks disappointing," said JP Morgan Asset Management portfolio manager, Nick Gartside.

MSCI's world stocks index .MIWD00000PUS , which tracks shares in 45 nations, was up 0.34 percent.

Sterling was down 1.53 percent at $1.3120 GBP=D4 and on track for its largest one-day fall in a month against the dollar.

"The BoE's dovish guidance and bearish outlook for growth will leave the pound at risk of further falls in the months ahead," said Joe Manimbo, senior market analyst at Western Union Business Solutions. Street shares were little changed as investors awaited Friday's U.S. nonfarm payrolls report for clues on the timing of the next Federal Reserve interest rate hike.

The number of Americans filing for unemployment benefits unexpectedly rose last week, but the labor market remains healthy and will probably continue to support economic growth for the remainder of this year. is a little bit of order being restored in the market today, but (it) is in a wait-and-see period ahead of the jobs report," said Adam Sarhan, chief executive officer at Sarhan Capital. Dow Jones industrial average .DJI fell 2.57 points, or 0.01 percent, to 18,352.43, the S&P 500 .SPX gained 0.96 points, or 0.04 percent, to 2,164.75 and the Nasdaq Composite .IXIC added 5.01 points, or 0.1 percent, to 5,164.75.

Europe's broad FTSEurofirst 300 index .FTEU3 was up 0.69 percent at 1,331.37. Strength in major financial and industrial stocks such as Aviva AV.L and Siemens SIEGn.DE boosted the region's equity markets. prices slipped after gains made earlier in the session and on the previous day as global overproduction and unsold crude weighed on markets. crude LCOc1 was down 0.26 percent at $42.99 a barrel, while U.S. crude CLc1 was up 0.24 percent at $40.93.

In bond markets, the BOE rate cut sent U.S. Treasury yields tumbling with some short- and medium-term yields hitting their lowest levels in more than three weeks. move pushed yields on 10-year UK government bonds or Gilts to a record low of 0.646 percent GB10YT=RR .

Benchmark 10-year U.S. yields US10YT=RR hit their lowest level in three days of 1.484 percent.

The dollar, meanwhile, gained against a basket of currencies for a second straight session, as investors continued to balance positions ahead of Friday's jobs report.

The dollar index .DXY , which tracks the greenback against six major currencies, was up 0.14 percent to 95.695.

Gold prices turned higher on the BOE decision but the stronger dollar kept a lid on gains. gold prices XAU= were up 0.42 percent to $1,363.21 an ounce.

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