Traders ignore rate hold to focus on Barclays'' performance

The fact that the earlier decision to hold interest rates at five per cent was widely expected meant that Bank''s move had little impact on the FTSE today.

In fact, slightly stronger than expected profits from Barclays and positive commodity stocks ensured that the blue chip index only closed down 8.60 points at 5477.50 today (August 7th).

Martin Slaney, head of derivatives at GFT Global Markets, explained to Reuters: "No change was by far the market consensus, despite the minutes from the previous meeting showing a three-way split.

"The reality is that despite a clearly slowing economy, the twin evil of rising inflation simply rules out any possibility of a majority decision in favour of a cut or a hike in rates for now."

In particular, banking stocks on the FTSE recovered after Barclays posted first-half profits that beat forecasts. As a result, shares in the lender closed up 1.6 per cent at 375.

It was followed by other banking stocks, which were buoyed by the better than expected result. HBOS closed up 0.5 per cent at 334.75, while Lloyds TSB jumped 1.4 per cent to 318.75.

"Barclays'' results seem to have been relatively well taken," Roger Cursley, UK strategist at Investec, told Reuters.

"But I am not sure that underlying sentiment has improved greatly. There is still deteriorating economic news. Rather than people actively chasing the stocks for good news, I think they are just unwinding the risk positions."