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Bank of England warns of gloomy outlook

The Governor of the Bank of England’s, Mervyn King, today cut growth forecasts for the UK economy to zero, from its pretty modest previous prediction of 0.8%. In its quarterly inflation report, it cited the ongoing eurozone crisis and one off factors such as weather and bank holidays in reducing growth to below historical averages. The news came despite the £375 billion worth of money pumped into the economy, in the form of quantitative easing, since 2010.

After the dramatic falls seen yesterday, Standard Chartered sat atop of the FTSE 100 leader board this morning, amid rumours that it may reach a settlement with US regulators following the Iranian money laundering allegations. The stock has divided banking analysts, with some issuing downgrades on regulatory uncertainty, whilst others maintain their higher price targets citing similar cases that were settled for relatively small considerations. Shares closed the day up 7.1% at 1316.

Rio Tinto, one of the world’s biggest mining companies, was the second best performer of the day following its first half results. They were slightly ahead of expectations at the bottom line given a one-off tax benefit. Whilst all metrics were down on the comparative period in 2011, this was due to lower commodity prices (a scenarios that was well anticipated), and commentary alluded to a pickup in demand towards the end of the year. Shares in the group closed up 2.9% at 3220p.

The FTSE 100, having fallen more than 0.5% throughout the morning, clawed back some losses to trade 0.1% higher at 5846 by the close of trade. This was in line with flat US indices, although outperformed some European bourses that were still in negative territory.

This was posted in Bdaily's Members' News section by James .