UK Shares Suffer Biggest Fall for 17 Months

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UK shares suffer biggest fall for 17 months



Bank minutes dampen chances of rate cut. MPC member Lambert warns risks on downside

By Philip Thornton, Economics Correspondent

Published: 20 October 2005


The London stock market suffered its worst fall in 17 months yesterday as a warning by the Bank of England over soaring oil prices added to mounting fears of higher interest rates to tackle a rebound in inflation.

Billions of pounds were wiped off share values as the FTSE 100 index fell almost 2 per cent yesterday - the 18th anniversary of the 1987 Black Monday crash.

The minutes of this month's meeting of the Bank's Monetary Policy Committee warned it would raise rates if soaring oil prices triggered a broad rise in wages and prices.

"At present there was little sign the higher oil price was feeding through to wage settlements or inflation expectations, but if such effects were to take hold, the committee would need to run a tighter monetary policy," it said.

http://news.independent.co.uk/business/news/article320845.ece