SIGNS that the Bank of England will push the button on more economy boosting measures ensured the pound endured another punishing session today.
The minutes of this month’s interest rate meeting revealed an unexpected split, with Bank governor Sir Mervyn King and two other policymakers wanting to extend quantitative easing by another £25bn to £400bn.
While they were outvoted, the effect on the already weakening pound was noticeable, with sterling hitting a fresh eight month low of 1.529 US dollars and falling nearly 1% to 1.15 euros.
The FTSE 100 Index was buoyed by the prospect of further stimulus measures this spring, with the top flight bucking falls in Europe and on Wall Street – up 16.3 points to a fresh five-year high of 6395.4.
This was despite a big disappointment for investors in RSA Insurance after the More Than owner slashed its full-year dividend payment by a third.
The company said the decision to rebase its dividend was a prudent move that reflected the impact of falling bond yields on investment returns and its desire to focus on growth opportunities going forward.
RSA shares dived 14% or 19.3p to 117p after the 33% cut in its annual dividend to 3.9p a share. Other insurers were also affected, with Aviva off 15.2p at 354p and specialist insurance underwriter Catlin down 22.5p to 503p in the FTSE 250 Index.
Elsewhere, Vodafone steadied after Tuesday’s 2% slide, but the mobile phone giant’s shares failed to kick on after Ofcom’s cheaper-than-expected £2.3bn auction of 4G airwaves.
Drinks can maker Rexam topped the FTSE 100 risers board after posting higher profits, up 1% on an underlying basis to £418m, and boosting its dividend.
The biggest FTSE 100 risers were Rexam up 25.3p to 502p, Melrose Industries 8.6p ahead at 251.3p, Royal Bank of Scotland 9p higher at 354.1p and British American Tobacco up 84p to 3474p.