London open: Stocks fall after surprise BoJ move

London stocks fell in early trade on Tuesday, taking their cue from a weak Asian session, after a surprise policy shift from the Bank of Japan.

At 0820 GMT, the FTSE 100 was down 0.7% at 7,313.12.

Earlier, the BoJ shocked markets as it held its benchmark interest rates steady but said it was widening its yield target range.

The Bank left the policy balance rate unchanged at -1.0% and the 10-year yield control target unchanged at zero. However, it also announced a surprise tweak to the yield control curve policy meaning that it will now allow the 10-year bond yield to fluctuate in a range of 0.5% above or below the target of zero, versus 0.25% previously.

The BoJ said in a statement that the change to the yield curve control policy is expected to "enhance the sustainability of monetary easing".

The yen strengthened and bonds sold off after the announcement.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The decision is being read as a sign of testing the water, for a potential withdrawal of the stimulus which has been pumped into the economy to try and prod demand and wake up prices.

"But the Bank is still staying firmly plugged into its bond purchase programme, claiming this is just fine tuning, not the start of a reversal of policy."

With only days to go until Christmas, there was just a smattering of corporate news.

Petrofac tumbled after the oilfield services provider warned that it expects a full-year group EBIT loss of around $100m due to challenges in the Engineering & Construction segment.

International distribution group Bunzl said it was selling its UK healthcare division to Mediq and buying four other businesses.

Elsewhere, Irn Bru maker AG Barr took full ownership of plant-based milks business Moma Foods after buying the remaining 38.2% stake from founder Tom Mercer and the other minority shareholders for £3.4m.

Fuel and toll payments company Eurowag said it was buying the remaining 30% Sygic it does not already own for €14.4m.

Hilton Food Group said it has signed a long-term collaboration in Singapore with Country Foods.

Market Movers

FTSE 100 (UKX) 7,313.12 -0.65%
FTSE 250 (MCX) 18,527.67 -0.65%
techMARK (TASX) 4,309.86 -0.80%

FTSE 100 - Risers

Aveva Group (AVV) 3,210.00p 0.03%
F&C Investment Trust (FCIT) 892.00p 0.00%
GSK (GSK) 1,420.80p 0.00%
Compass Group (CPG) 1,902.00p -0.08%
Diageo (DGE) 3,632.50p -0.10%
Unilever (ULVR) 4,168.50p -0.12%
Antofagasta (ANTO) 1,469.00p -0.14%
Haleon (HLN) 313.35p -0.14%
NATWEST GROUP (NWG) 258.90p -0.15%
HSBC Holdings (HSBA) 494.85p -0.18%

FTSE 100 - Fallers

Sage Group (SGE) 748.40p -2.96%
SEGRO (SGRO) 749.20p -2.04%
Unite Group (UTG) 880.50p -1.95%
Burberry Group (BRBY) 1,997.50p -1.75%
Rolls-Royce Holdings (RR.) 87.36p -1.67%
Halma (HLMA) 2,028.00p -1.65%
Melrose Industries (MRO) 125.95p -1.60%
Ocado Group (OCDO) 624.00p -1.58%
Frasers Group (FRAS) 719.50p -1.57%
Entain (ENT) 1,289.50p -1.53%

FTSE 250 - Risers

Auction Technology Group (ATG) 779.00p 4.56%
Energean (ENOG) 1,320.00p 4.35%
HICL Infrastructure (HICL) 161.80p 0.50%
Investec (INVP) 492.90p 0.49%
Worldwide Healthcare Trust (WWH) 3,180.00p 0.47%
Currys (CURY) 54.70p 0.46%
Sirius Real Estate Ltd. (SRE) 73.30p 0.27%
Softcat (SCT) 1,197.00p 0.17%
SSP Group (SSPG) 233.10p 0.13%
Smithson Investment Trust (SSON) 1,273.00p 0.08%

FTSE 250 - Fallers

Future (FUTR) 1,207.00p -2.90%
Wood Group (John) (WG.) 122.45p -2.86%
Aston Martin Lagonda Global Holdings (AML) 172.00p -2.82%
Safestore Holdings (SAFE) 915.00p -2.45%
Big Yellow Group (BYG) 1,131.00p -2.42%
Essentra (ESNT) 229.00p -2.35%
Harbour Energy (HBR) 300.00p -2.34%
Lancashire Holdings Limited (LRE) 588.50p -2.24%
Darktrace (DARK) 263.60p -2.15%
WH Smith (SMWH) 1,432.00p -2.12%