LONDON July 10: Shares on the London Stock Exchange fell last morning on overnight losses on Wall Street and dealers' prediction that the British base rate would be raised later in the session. Later, the Bank of England raised its key lending rate by 0.25 per cent to 6.75 percent in its second decision on monetary policy after getting operational control over rates in May.

The FT-SE 100 index of leading shares fell by 15.3 points to 4,747.1 points in the early trading session.

In Paris, the CAC-40 index opened 22.1 points lower at 2,928.46 points. London dealers said that heavy overnight losses on Wall Street provided the main impetus for trade here.

Tighter monetary policy has already been factored into the market and the dealers were expecting the base rate hike as the central bank would try to rein in inflationary pressures in the British economy. Dealers said that any rise in the value of the pound that might follow an interest rate hike would hit stocks as it would unleash a string of profit downgradings for key exporting companies.

US-traded stocks showed the sharpest falls early Thursday. Banking shares particulary fell sharply after a slump on Wall Street. Shares in HSBC bank fell by three pence to 1,939.5 pence, Barlcays stock fell by three pence to 1,224.5 pence and NatWest shares fell by three pence to 848 pence.

Shares of BAT Industries, which has interests in the tobacco and financial services sectors, fell by two pence to 535 pence in the wake of negative comments by US president Bill Clinton on a tobacco litigation deal in the United States.

Shares in British Aerospace, the armaments and aircraft manufacturer, fell by two pence to 1,318.5 pence despite reports that the German government has finally approved participation in the euro-fighter project.

Eurotunnel, which operates services through the Channel Tunnel, suspended trading of its shares at 81.5 pence ahead of a shareholder meeting called to approve its debt restructuring plans.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.