| London close: FTSE higher on rate rise as sterling tumbles The top flight index closed higher on Thursday as the pound skidded versus both the dollar and the euro after the Bank of England hiked interest rates for the first time in a decade, as widely expected. By the close, the FTSE 100 was up 0.90% to 7,555.32, while the pound was down 1.71% against the euro at 1.1205 and 1.41% weaker versus the greenback at 1.3063. Over in Europe, stocks were a little less upbeat with the DAX trading 0.18% lower to 13,440.93, the CAC 40 down 0.07% to 5,510.50 and the IBEX 35 0.43% weaker at 10,457.80. Sterling's losses came as currency traders took profits after the BoE voted 7-2 to lift interest rates to 0.5% from 0.25% - the first hike since July 2007 - in a move that reverses the cut implemented in August 2016 in the aftermath of the Brexit vote. The stock benchmark had been trading a touch higher before the announcement, but share price gains were extended as the pound took a hit. A weaker sterling tends to benefit the FTSE 100 as around 70% of its constituents derive most of their earnings from overseas. "The market is clearly seeing this as a dovish hike and the cautious comments in the accompanying statement have led many to believe that this is a case of one-and-done rather than the start of a sustained hiking cycle," said David Cheetham, chief market analyst at XTB. Forecasts from the BoE suggested inflation would be under control in the medium term if interest rates rose to 1% by late 2019, but the monetary policy committee said any futures increases in the Bank Rate would be "at a gradual pace and to a limited extent". Rain Newton-Smith, CBI chief economist, said: "The decision to raise interest rates comes as no surprise, given the recent signals from the Bank and several monetary policy committee members signalling their intention to vote for a change of course. "While it’s the first rate rise in over a decade, it is only taking the rate back to the level seen in August 2016 and at 0.5% it remains near rock bottom. "Businesses will be watching the reaction of consumers closely and what’s important is the pace of any future rises. As rates creep up, it’ll be important to keep an eye on the impact for those at the lower end of the income scale." All eyes will be on the US again on Thursday evening as US President Trump is due to announce the successor to Janet Yellen as chair of the US central bank, amid expectations he will plump for Fed Governor Jerome Powell. Earlier, some distraction from central bank news had come from data showing the UK construction downturn unexpectedly eased a little last month, though confidence in the outlook waned to almost a five-year low. The Markit/CIPS construction purchasing managers’ index rose to 50.8 in October from 48.1 in September, beating the consensus forecast of 48.5. A pickup in new orders to 50.5 from 48.5 in September indicates that the headline PMI may hold steady over coming months. However, while the marginal upturn in overall construction output was led by house-building, civil engineering activity slumped to a four-year low and commercial construction activity also saw lower volumes. Housebuilding groups, Persimmon and Barratt were among the main fallers on the FTSE 100, with Taylor Wimpey trading flat. In other corporate news, WM Morrison was in the red despite saying reporting a 2.5% increase in third-quarter like-for-like sales. Randgold Resources fell after the gold miner posted a drop in profit and production for the third quarter, but said it was on track to meet its 2017 guidance. RSA Insurance was also on the back foot after it said that it has set aside £50m for US and Caribbean catastrophic events in the third quarter, warning that the number could rise. GlaxoSmithKline edged higher after saying that it has received FDA approval to fast-track a new cancer treatment. Lancashire Holdings was lower as it posted a third-quarter loss due to natural catastrophes, while Ashmore and Dunelm slipped as their stock went ex-dividend. Playtech tumbled after the gambling software development group said that its performance for the full year well be around 5% below the bottom end of market expectations due to a slowdown in Asia and challenges with its Sun Bingo contract. BT reversed earlier gains to trade lower as it failed to impress investors by maintaining its dividend, with sales and profits down in the first half. On the upside, Howden Joinery, Tate & Lyle and Intu Properties were all trading higher after well-received updates. | 
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