Britain's top share index ended flat on Thursday after a rate cut failed to cheer investors, with gains in energy stocks offsetting a slide in consumer goods giant Unilever after it scrapped forecasts. The FTSE 100 index ended up 0.33 points at 4,228.93, scraping into positive ground for a third successive day.
The Bank of England cut base rates by 50 basis points to an all-time low of 1 percent, as expected, as it tries to soften the blow from what is already the fastest pace of economic decline in nearly three decades. But the move was widely forecast and poor corporate news added to investor pessimism, with Unilever shares sliding 5.9 percent after it said it could not give a specific outlook for 2009 in current market conditions.
"The future remains uncertain even for the more resilient sectors, and (after Unilever) people will look to see where else you get negative surprises," said Tim Rees, fund manager at Insight Investment. Other stocks also seen as relative safe havens were under pressure with confectionery maker Cadbury sliding 2.9 percent and drugmaker Reckit Beckniser down 4.9 percent.
But GlaxoSmithKline bucked the trend, adding 0.7 percent after slashing costs and costs in a new round of restructuring while saying it would not give guidance on earnings in 2009. The market recovered from losses earlier in the session as traders cited talk that Washinton's rescue plan for banks may include suspension of a key accounting rule.
But the overall tone remained downbeat and investors were looking ahead to non-farm payrolls on Friday for more clues on the outlook for equities. "Tomorrow's non-farm payrolls will doubtless help define precisely what the mood of equity traders is going into the weekend break, but for the time being any real optimism seems to have been well and truly buried once again," said David Fineberg, Chief Dealer at CMC Markets
The energy sector broadly gained, buoyed by gas producer BG Group, the top FTSE 100 gainer up 10.2 percent. The company said net profit, excluding one-off items, beat forecasts with a 25-percent jump in the fourth quarter compared with the same period of 2007 and gave a buoyant outlook for growth.
TUI Travel was also among the top gainers, up 8 percent, after Europe's biggest travel firm said it is well positioned to perform in line with its expectations for the current year despite the challenging trading environment.
Peer Thomas Cook gained 3.9 percent. Royal Bank of Scotland added 5.8 percent after investors reacted positively to the news that it had scrapped the 10-month auction of its insurance arm. The European Central Bank on Thursday left its rates unchanged at 2 percent as expected.
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