FTSE shrugs off rate cut, down 2.6% on Glaxo, BT

By Dominic Lau

LONDON, Feb 7 (Reuters) - Britain's leading share index slid 2.6 percent on Thursday, shrugging off an expected Bank of England interest rate cut as a raft of results disappointed investors, with GlaxoSmithKline (GSK.L: Quote, Profile, Research) a significant loser.

GSK, Europe's biggest drugmaker, slumped 7.6 percent after it warned that 2008 earnings would fall due to sliding sales of diabetes drug Avandia and more generic competition. For details please double click on [ID:nL07669658]

Rival AstraZeneca (AZN.L: Quote, Profile, Research) lost 2.4 percent after Indian drugmaker Ranbaxy Laboratories (RANB.BO: Quote, Profile, Research) said it had received tentative U.S. approval to sell a generic form of Astra's blockbuster heartburn and ulcer pill Nexium.

The FTSE 100 .FTSE closed down 151.3 points at 5,724.1. The UK benchmark index has lost 5 percent so far this week and is down 11 percent for the year.

"The story of today was all about corporate earnings. The interest rate decision was almost a side show. There was no surprise at all, largely priced in, largely expected," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

"But what had not been expected was the weak numbers from Glaxo, BT, Rolls-Royce, etc, which obviously put a big question mark over the strength of potential slowdown based on corporate earnings," he said.

The Bank of England cut its key interest rate by a quarter percentage point to 5.25 percent to help shore up the economy but policymakers remained worries about inflation, dampening hopes of rapid fire rate cuts. [ID:nL07897729]

The European Central Bank kept euro-zone rates unchanged at 4 percent. Shares in continental Europe also finished lower.