FTSE Eases Ahead Of BoE Decision; Unilever Sinks

Britain's leading share index was down 0.2 percent ahead of the Bank of England's midday decision on interest rates, led by Unilever, which disappointed investors by scrapping its sales and profit margin targets.

The BoE's Monetary Policy Committee is expected to cut the bank's base lending rate by 50 basis points to 1 percent in view of what is already the fastest pace of economic decline in nearly three decades, but analysts were sceptical it would help.

"The actual change in the base rate is going to do very, very little because we've had a massive cut over the period of the last few months and that hasn't changed the direction of the market at all," said Edward Menashy, economist at Charles Stanley.

"If we are just looking at today I would reckon that it would require a minimum of a 1 percent cut if it's to have any impact at all on the market."

The European Central Bank is expected to leave euro zone rates unchanged at 2 percent when it announces its verdict at 1245 GMT.

By 1059 GMT the FTSE 100 index was down 7.68 points at 4,220.92, snapping two days of gains.

Unilever was the top faller, losing 5.7 percent after the consumer goods giant posted a 7.3 percent rise in fourth-quarter underlying sales, at the top of forecasts, but declined to give a specific outlook for 2009 or reaffirm its 2010 targets.

Other food producers also fell, with Cadbury down 0.3 percent and Associated British Foods losing 1.3 percent.

GlaxoSmithKline slipped 1.9 percent ahead of its results due later in the day.

"All in all there don't seem to be too many positive stories ... it is a fairly anaemic markdown across the board," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

"It is general global economic malaise, there is just no positive catalyst to reverse that trend at the moment."

BANKS MIXED

Banks were mixed with Barclays, Royal Bank of Scotland and Lloyds gaining between 3.4 and 5.8 percent, and HSBC and Standard Chartered down 1.1 and 2.3 percent respectively.

The energy sector broadly gained, buoyed by gas producer BG Group which was the top FTSE 100 gainer, up 6.4 percent after it reported better than expected results and gave a buoyant outlook for growth.

Europe's biggest travel firm, TUI Travel rose 2.6 percent after it said it was on track to meet its full year expectations, despite the challenging trading environment.

Compass Group, the world's biggest caterer, added 2.3 percent after it said first-quarter operating profit to the end of December was "well ahead" of the same period last year, driven by new business wins and cost efficiencies.