ECB stimulus pledge hits London market

THE London market was in the red after the European Central Bank (ECB) said it would hand the eurozone a dose of stimulus if the Brexit vote began to hamper economic growth.

The FTSE 100 Index was 29.1 points lower at 6699.89 after ECB president Mario Draghi said Britain’s exit from the European Union had weakened the eurozone’s outlook as the bank kept interest rates on hold.

The ECB update came as London’s premier index was led back below the 6,700 mark by budget airline easyJet, which saw its shares slump after it admitted to facing the most difficult summer holiday season for years.

Shares were down 5 per cent or 60p to 1067p after the low-cost carrier said it has been forced to slash fares, which are down by more than 5 per cent year on year, to boost demand, while costs have surged after the pound has fallen around 10 per cent since the UK’s decision to leave the EU.

Boss Carolyn McCall said the pound’s plunge after the Brexit vote had seen a £40 million currency swing against the group, while holidaymaker confidence has also been impacted by sterling’s weakness as well as the massacre in Nice and attempted coup in Turkey.

The pound slipped 0.1 per cent against the dollar to $1.321 and 0.2 per cent against the euro to €1.199, despite strong government borrowing figures for the UK. Chancellor Philip Hammond said there was “underlying strength” in the British economy as government borrowing fell to its lowest level in June since 2007.

The Office for National Statistics (ONS) said public sector net borrowing excluding public sector banks hit £7.8 billion last month, down £2.2bn compared to last year and below economists’ expectations of £9.5bn.

However, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that despite June’s figures, the Government’s efforts to repair the public finances have been “disappointingly slow”. He added: “The Government is estimated to have borrowed £75.3bn in 2015/16, exceeding the OBR’s forecast by £3bn.

“Meanwhile, overshoots in April and May mean borrowing in the first three months of 2016/17 has been only 8.3 per cent lower than in the previous year. Borrowing therefore is on course to overshoot the OBR’s forecast of £55.5bn by around £14bn.”

Germany’s Dax was 0.1 per cent higher and the Cac 40 in France marginally down. In stocks, London-listed miners bounced back from a fall. Glencore was up 6.8p to 182.9p, Antofagasta rose 12.3p to 495.2p and Anglo American climbed 13.3p to 787.7p. Betting firm William Hill was more than 10 per cent up after announcing its chief executive was stepping down after the firm was hit by profit warnings under his tenure. James Henderson leaves the business immediately after just two years in charge, with chief financial officer Philip Bowcock taking the helm until a permanent CEO is appointed. Shares were up 29.2p to 304.3p.

Biggest FTSE 100 risers were Ashtead Group up 57p to 1185p, Glencore up 6.8p to 182.9p, Antofagasta up 12.3p to 495.2p and Anglo American up 13.3p to 787.7p. Biggest fallers were easyJet, down 60p to 1067p, Sky down 32.5p to 867p, IAG down 15.1p to 405.6p and Next down 139p to 4896p.