The Bank of England on Thursday raised its key interest rate to 5% from 4.75%, its highest level in more than five years, as the central bank acts against possible wage increases that may appear in a few months.

Decliners

GlaxoSmithKline lost 1.4%. Concerns that the US Congress will look to cut the price of drugs following the recent mid-term elections had impacted GlaxoSmithKline negatively.

Mining stocks were also sharply weaker, with Xstrata off 2.4%. BT fell 1.8% after it revealed its share of the UK broadband market fell to 25% in the three months to the end of September, down from 30% in the previous quarter.

Man Group lost 0.8%, retreating from a strong run in advance of news of a 33% rise in interim profit before tax of $766 million.

Royal & Sun Alliance met expectations with news of operating profit of 590 million pounds, but its shares lost 1.1% as investors booked profits.

Dairy Crest fell 3.7% after it announced plans to place 6.3 million new shares in order to fund its 248 million acquisition of Saint Hubert, the French and Italian spreads business of Uniq.

Advancers

Scottish Power shares were last flat. Scottish Power shares jumped in early trade on reports that the Spanish group would bid for the company. The news provided hope for a further bout of cross-border consolidation and sent the wider utilities sector higher. Scottish & Southern Energy rose 2.9%.

SABMiller, the brewer, was 2.6% stronger after it reported a 33% rise in interim revenue and a 22% hike in profit before tax.

Punch Taverns was 2.1% stronger after the pub chain reported a 48% increase in profit before tax.


9:00AM Stocks futures pointed to a nixed start, with Cisco providing a boost.
U.S. stocks indicated a flat market opening Thursday, reflecting rising oil prices and positive Cisco Systems quarterly earnings. U.S. stock futures edged slightly higher after a report showed a narrower-than-expected September trade deficit and a drop in import prices. The U.S. Commerce Department said the trade deficit narrowed by 6.8% to $64.3 billion, which was the largest narrowing since December 2004. In another report, the Labor Department said import prices dropped 2% in October, the largest drop in three years. Initial filings for state unemployment benefits fell 20,000 to 308,000.

Cisco Systems Inc. (CSCO: chart), the world's largest networking equipment maker, reported a 28% jump in quarterly profit on soaring sales of its core products and gains from a recent acquisition. The company posted Q1 net income of $1.61 billion, or 26 cents per share, compared with $1.26 billion, or 20 cents per share last year. Excluding one-time charges, Cisco would have earned $1.9 billion, or 31 cents per share. Cisco also from benefited from its recent $6.9 billion acquisition of Scientific-Atlanta Inc., which added $584 million to Cisco's sales during the quarter. The company's shares rose 8.6% to $27.27 in pre-open trading.

Dow component 3M (MMM: chart) said it would sell its global branded pharmaceutical business in 3 deals for a total of $2.1 billion. Media giant Viacom (VIA: chart) reported a 16% drop in Q3 earnings, still above analyst forecasts. The company also said its chief financial officer was resigning. S&P 500 futures rose 1.2 points, above fair value. Dow Jones industrial average futures were unchanged after being down 6 points before the data, and Nasdaq 100 futures gained 7.25 points.

Import and export prices dropped in October.
The Department of Labor released its report on import and export prices in the month of October on Thursday. The report showed a decrease in both import and export prices. The report said that import prices fell 2.0 percent in October, matching the decrease that was seen in the previous month. The decrease was largely due to a significant decline in prices for petroleum imports. Prices for petroleum imports fell 8.3 percent in October following a 9.7 percent decrease in September. Excluding petroleum imports, import prices still fell 0.6 percent in October after edging up 0.2 percent in the previous month. The Labor Department also said that export prices fell 0.4 percent in October after a matching decrease in September. The drop in export prices came in spite of a notable increase in prices for agricultural exports. Prices for agricultural exports rose 1.1 percent in October after a 0.5 percent decrease in September. Excluding agricultural exports, export prices fell 0.5 percent in October after a 0.3 percent decrease in the previous month.

U.S. trade deficit narrowed sharply due to weaker oil prices.
Thursday morning, the Department of Commerce released its report on U.S. international trade in goods and services in the month of September, showing that the trade deficit narrowed even more than economists had expected. The report showed that the trade deficit narrowed to $64.3 billion in September from a revised $69.0 billion in August. Economists had expected the deficit to narrow to $66.0 billion from the $66.9 billion originally reported for the previous month. The smaller deficit came as the value of exports increased while the value of imports fell. The report showed that the value of exports rose 0.5 percent to $123.2 billion in September, while the value of imports fell 2.1 percent to $187.5 billion. The notable decrease in the value of imports came amid a substantial decline by the price of oil, which helped to reduce the value of oil imports. The trade deficit with OPEC narrowed to $9.2 billion in September from $11.2 billion in August. At the same time, the report also showed that the politically sensitive trade deficit with China widened to $23 billion in September from $22.0 billion in August.


8:00AM 3M Co. agreed to sell its pharmaceutical business for $2.1 billion.
3M Co. (MMM: chart), manufacturer in the health care, telecom, and transportation sectors, announced it would sell its global branded pharmaceutical business in three deals for a total $2.1 billion. The deals are part of a strategic review the company revealed in April. Graceway Pharmaceuticals Inc. agreed to acquire 3M's pharmaceutical operations in the U.S., Canada, and Latin America for $875 million. Meda AB agreed to buy 3M's pharmaceutical business in Europe for $857 million. And Ironbridge Capital and Archer Capital will buy the Asia-Pacific operations, including Australia and South Africa, for $349 million.

1,050 people work in 3M's worldwide pharmaceuticals unit. About 70%, or 735, of them will be given employment opportunities with the acquiring companies. The deals are subject to regulatory clearances. 3M said the deal is expected to complete in the fourth quarter. In addition, it said it would record a gain on the transactions, and will incur charges as restructuring further continues.